(a)Inventory undervaluation

Generally up to 1½ marks each matter explained 1 mark each test

Ideas
(i) matters
 • omission from count
 • cut-off
 • scrap/waste etc

(ii) tests
 • physical inspection
 • arithmetic checks
 • cut-off tests
 • analytical procedures
 • tests on production records/pricing

Tutorial note: Tests must address understatement of stock at 30 June.

Max 8 marks

(b)High materials consumption

Generally up to 1½ marks each matter explained  1 mark each test

Ideas
(i) matters
 • cut-off
 • losses
 • obsolescence etc
 • major contracts
 • change of supplier

(ii) tests
 • physical inspection
 • arithmetic checks
 • cut-off tests
 • tests of control

Tutorial note: Matters must address overstatement of materials consumption in the quarter to 30 June

max 7 marks