Question

Assertions

The following issues were discovered by the audit team while performing the audit of Matador Corporation. Consider each issue independently

1.. Some inventory items sitting in the warehouse were not included in Matador’s inventory account balance.

2. Matador recorded service revenue, but there is no evidence any service work was performed.

3. The fair value for financial instruments (i.e., investments) reported on the balance sheet differs significantly from the audit team’s own determination of the investment’s fair value. 3

4. In December, Matador purchased some raw materials to be used in its manufacturing process. The raw materials arrived in their warehouse on December 30th. However, Matador didn’t record the raw materials in its inventory accounts until January 2nd (December is the end of Matador’s fiscal year).

For each of the four audit issues above, identify the assertion that best pertains to that issue.

Answer 1