RSM323H1 Lecture Notes - Lecture 5: Financial Statement
Document Summary
Lone moon brewing purchased bulk aluminum sheets and manufactured its own cans. To ensure a source of raw materials, the company entered into a long-term purchase agreement for 6 million kilos of aluminum sheeting at 80 cents per kilo. At the end of the year, 3. 0 million kilos have been purchased and used. In the interim, aluminum prices had fallen to 64 cents per kilo. Lone moon had a financial obligation for an additional ,000 in excess of the current market price through its purchase commitment. The amounts involved are material to the financial statements of lone moon brewing. The materials purchase contract was entered into by the execution of valid and enforceable contracts and payments under the contract were properly authorized before any payments were made. The contracts are not being intentionally hidden from review. What audit procedures should the company"s auditors have used to uncover this series of transactions.
