Brown, CPA, is auditing the financial statements of Big ZWholesaling, Inc., a continuing audit client, for the year endedJanuary 31, 2013. On January 5, 2013, Brown observed the taggingand counting of Big Z’s physical inventory and made appropriatetest counts. These test counts have been recorded on a computerfile. As in prior years, Big Z gave Brown two computer files. Onefile represents the perpetual inventory (first- in, first- out)records for the year ended January 31, 2013. The other filerepresents the January 5 physical inventory count.


1- Brown issued an unqualified opinion on the prior year’sfinancial statements.

2- All inventory is purchased for resale and located in a singlewarehouse.

3- Brown has appropriate computerized audit software.

4- The perpetual inventory file contains the followinginformation in item number sequence:

a) Beginning balances at February 1, 2012: Item number, itemdescription, total quantity, and prices.

b) For each item purchased during the year: Date received,receiving report number, vendor, item number, item description,quantity, and total dollar amount.

c) For each item sold during the year: Date shipped, invoicenumber, item number, item description, quantity shipped, and dollaramount

d) For each item adjusted forphysical inventory count differences: date, item number, itemdescription, quantity, and dollar amount.

5- The physical inventory filecontains the following information in item number sequence: tagnumber, item number, item description, and countquantity.


Describe the substantive auditingprocedures Brown may consider performing with computerized auditsoftware using Big Z’s two computer files and Brown’s computer fileof test counts. The substantive auditing procedures described mayindicate the reports to be printed out for Brown’s follow-up bysubsequent application of manual procedures. Do not describesubsequent manual auditing procedures.

Group the procedures by thoseusing (a) the perpetual inventory file and (b) the physicalinventory and test count files.

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