50. ASM Motor Cars co. manufactures a range of motor cars and its year end is 31 March 2018. You
are the audit supervisor of Khanna & Associates and currently preparing the audit programmes for the
year-end audit of ASM. The entity undertakes continuous production of cars, 24 hours a day, seven days
a week. An inventory count is to the undertaken at the year end and Khanna & Associates will attend.
You are responsible for the audit of work in progress (WIP) and will be part of the team attending the
count as well as the final audit. WIP constitutes the partly assembled cars at the year end and this balance
is likely to be material. ASM values WIP according to percentage of completion, and standard costs are
then applied to these percentages.
Which of the following is NOT a substantive procedure the audit could perform to obtain sufficient and
appropriate audit evidence in relation to the valuation of work in progress?
(a) Discuss with management how the percentage completions are attributed to WIP
(b) Observe the procedures carried out in the count in assessing the level of WIP; consider
reasonableness of the assumptions used
(c) During the count, verify all the percentage completions if they are in accordance with ASM’s policies
(d) Review the level of variances between standard and actual costs
 
OPTION “C” says to verify “ALL” the percentage completions thats why it is incorrect and we are suppose to select incorrect one