Prologue

The Frozen Empire

IceQueen Couture — the luxury fashion brand worth R500 million.

Built by two sisters: Elsa and Anna Winters.

But three months ago, Elsa disappeared. No goodbye. Just a note:

"Trust no one. — E"

⚠️ Your Assignment:
You are Thandi Khumalo, an auditor at KPMG.

The bank wants to give IceQueen a R100 million loan.

But only if your audit report is clean.

You arrive at IceQueen headquarters. Anna is waiting.

Anna: "Everything is clean. I promise."

She hands you the financial statements.

You see: Inventory = R85 million

🚨 That's 75% of total assets!
Chapter 1

Reading the Numbers

Back at your desk, you look at the numbers carefully.

IceQueen Couture - Financial Position
Total Assets: R 113,000,000
Inventory: R 85,000,000
Cash: R 2,500,000
💡 Quick Tip

When reading financial statements, look at proportions.

R85M ÷ R113M = 75%

Most fashion companies have inventory around 20-30% of total assets.

75% is way too high!
🤔 Why is 75% inventory suspicious?
Think about what this means...
Chapter 2

What Are We Testing?

Your manager, Mr. Mbatha, walks over.

Mr. Mbatha: "We need to test that inventory."

📚 What Is An Assertion?

An assertion is a claim management makes about financial statements.

For Inventory, We Test:
  • Existence: Does it physically exist?
  • Valuation: Is it worth what they claim?
  • Rights: Do they actually own it?

Mr. Mbatha shows you the inventory details:

Inventory Breakdown
Winter Collection: R 30,000,000
Summer Collection: R 27,000,000
"Frozen" Line: R 28,000,000
🚨 The "Frozen" Line:
3,200 dresses × R8,750 each = R28M

None have sold. That's strange for luxury fashion.
🎯 Which assertion should we test FIRST?
3,200 unsold dresses worth R28 million...