Transaction Manipulation and Strategy on Quitting Own Built Business Venture

Discussion Topics
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Discussion Topics
Topic 1:Create a scenario that demonstrates specific ways in which management could manipulate transactions impacting inventory values that the auditing team might not detect. Recommend key strategies that the auditor could implement in anticipation of such manipulation. Justify your response.
The scenario is the management influencing understated recording the prices and quantities of inventory and omissions, affecting the value of the inventory and increasing the cost of goods sold (COGS). When there is understated inventory, the COGS increases as lower inventory causes lower closing stock and vice versa. Inventory is recorded at its costs in the balance sheet, and a lower figure would be recorded. The inventory and cost of goods sold are part of the acquisition and payment cycle, and auditing would consider trends and patterns in the cycle (Johnstone-Zehms et al., 2015). There is a need to consider inventory methods and determine what is recorded then matches what is available to evaluate inventory accuracy. Physical inventory count is the most common approach of inventory audit, compared with what is reported by the company. The auditors also need to consider whether the accepted inventory valuation methods, First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Weighted Average Cost, are used consistently and influence pricing.
Discussion Topic 2:Imagine you want to exit your business venture from t...