You Are Responsible for Planning the Audit of Inventory for the BCS

You are responsible for planning the audit of inventory for the BCS Corporation.You have documented the internal control system related to the movement of goods from raw materials to finished goods for the manufacturing process.Your documentation includes the following potential controls:
• When materials are transferred from raw materials to work-in-process,the inventory storeroom clerk signs off on the "materials requisition sheet".These are filed in the production area by date.• When materials are transferred from work-in-process to finished goods,the production manager signs off on the "production report worksheet" indicating that he approved the transfer.The "production reports" are filed in the production department.• The storeroom manager compares the totals on the "production report worksheet" with the quantity the storeroom clerk counts and if the quantities agree the journal entry to record the transfer is made.• At the end of each week,the cost accountant prepares a reconciliation between the entries on the "materials requisition sheets" and the general ledger to determine that all transfers were recorded.The reconciliation sheet is initialed indicating agreement.The reconciliation sheets are filed in the production department.Prepare a sampling plan.For this sample,the auditor determines that the acceptable risk of overreliance is 5%,the tolerable deviation rate is 15%,and the expected population deviation rate is 3.5%.These decisions are based on professional judgment.The sample size is 40 with 2 deviations allowed.The auditor will perform a nonstatistical sample.All of the documents needed for this sample are filed in 6 file drawers organized by month.