FINAL ASSESSMENT
QUESTION 1) (20 pts) The following are misstatements that have occurred in Fresh Foods Grocery Store,
a retail and wholesale grocery company:
1. On the last day of the year, a truckload of beef was set aside for shipment but was not shipped. Because
it was still on hand, the inventory was counted. The shipping document was dated the last day of the year,
so it was also included as a current-year sale
2. Employees in the receiving department took sides of beef for their personal use. When a shipment of
meat was received, the receiving department filled out a receiving report and forwarded it to the
accounting department for the amount of goods actually received. At that time, two sides of beef were
put in an employee's pickup truck rather than in the storage freezer.
3. During the physical count of inventory of the retail grocery, one counter wrote down the wrong
description of several products and miscounted the quantity.
REQUIRED
a) For each misstatement, identify one or more types of controls that were absent. (10 pts)
b) For each misstatement, suggest a control that may have prevented or detected the misstatement. (10
pts)
QUESTION 2) (30 pts) When a client fails to follow GAAP, the audit report can be unmodified, qualified,
or adverse depending on the materiality. Provide your own examples for each case. (10 pts each, 150
words each)
