Audit Evidence & Test Results
Falcon Creek Manufacturing • Year Ended December 31, 2024
Test Areas
3
Items Tested
70+
Exceptions Found
6
AJEs Prepared
1
Tests Complete
2 of 3
Revenue Transactions - Sample of 40 Items
Substantive Testing • Test accuracy and completeness of revenue recorded in December 2024
Sampling Method
Stratified random sampling, stratified by document value
Items Tested
40
Exceptions Found
3
Exception Rate
7.5%
Evidence Collected
Exceptions & Findings
INV-12847
Invoice recorded on 12/31 but shipped 1/2/2025
Adjustment Required
$48,500 reclassified to 2025
Auditor Impact
Corrected - AJE prepared
INV-12901
Quantity discrepancy between invoice and packing slip
Adjustment Required
$12,200 override (authorized by CFO)
Auditor Impact
Agreed - no entry needed
INV-12956
Customer dispute on quality - partial credit pending
Adjustment Required
$8,900 reserve recommended
Auditor Impact
Management agrees - Q1 resolution expected
TEST CONCLUSION
Revenue substantive procedures complete. Three exceptions identified and either adjusted or reserved for. Assertion: Completeness and Accuracy satisfied.
Controls Testing - Revenue Authorization (RV-C1)
Controls Testing (Operating Effectiveness) • Verify that all revenue transactions > $50K are reviewed and approved by sales manager
Sampling Method
Attribute sampling - all transactions >$50K in Nov-Dec
Items Tested
18
Exceptions Found
1
Exception Rate
5.6%
Evidence Collected
Exceptions & Findings
SO-4521
Approval email missing - only in SAP system
Adjustment Required
Design weakness - email approval process not consistently followed
Auditor Impact
No control deficiency - compensating control (SAP audit trail) effective
TEST CONCLUSION
Control is operating effectively. One exception does not indicate design or operating deficiency - SAP system approval authorization provides adequate evidence.
Inventory Valuation - NRV Test
Substantive Testing • Test lower of cost or NRV valuation as of December 31, 2024
Sampling Method
All SKUs with increases YoY + all slow-moving items
Items Tested
12
Exceptions Found
2
Exception Rate
16.7%
Evidence Collected
Exceptions & Findings
SKU-7823
Slow-moving chemical compound - no sales in 90 days
Adjustment Required
Recommend reserve of $120K for potential obsolescence
Auditor Impact
Pending - awaiting mgmt valuation analysis
SKU-9104
Raw material cost reduced - inventory still valued at old cost
Adjustment Required
Write-down of $34K recommended
Auditor Impact
Pending - mgmt obtaining current supplier quotes
TEST CONCLUSION
Testing in progress. Market data collection ongoing. Two potential NRV adjustments identified for management review.
Workpaper References
All evidence is indexed and cross-referenced to the Auditus workpaper system. Use the test ID above to locate supporting documentation.