Stock Take Report

[Vivienne]

I went for our annual stocktake.these are my experiences

Before we started counting we were put in pairs of two each and not to count as individuals.i suppose this is to ensure that mistake sare avoided when counting.

Secondly we were given pre numbered sheets on which to record the quantities that we were counting.i am sure the pre numbering is such that you do not miss one sheet when counting.

As we were counting those areas that we counted we were marking with chalk so that we do not count them twice

Internal auditors
our internal auditors were present they were doing a random count of the inventory unlike us the accounts staff who had to count every item


External auditors
i gathered the following on the external auditors
i)immediately they came they asked for the highvalue items.they did a random count on other materials but on the high value materials they ensured they counted them.i didnt understand why they were so particular on the high value items maybe someone can explain.

ii)they were given given protective clothing like dustcoats and boots.in addition to this they were given an equivalent of about 85 dollars each to buy some refreshments during the period of stocktake (7 days).does this 85 dollars amount to a modest gift or this could have impaired their independence.

iii)some of the items that they did not count ,they got the figures from us but they ensured that these were clearly marked that they relied on our figures.

After counting we entered the counted values in our stores system and then it produced a variance report because it compared what was sitting in the system with what we had entered.we worked on the variance reports with the stores keepers to provide explanations for those variances.

thereafter we produced a stocktake report where we even made some recomendations

[zeal]

why they were so particular on the high value items maybe someone can explain

Dear friend,
High value items are placed in Catagory A in ABC analysis, which is less in quantity while value of these items could be very high. These items can cover substantial portion in value of stock item in an organisation.
In my view, i would like to say following reason for your querry:-

a. To have specific notice to high value item. Also quantity of these items are mostly less.
b. These are slow moving items, thus emphasis is given to have assurance of condition and quality. There is also a check whether there is quality deterioration.
c. To ensure, proper quantity available and there is no missing of item having high value.
d. In case these are missing, these could be used in other place of organisation (at branch) which these could be checked while visiting branch for audit.

This much from my side.

[Vivienne]

thanks zeal for your response .i have understood something.please also comment on the $85 that they were given for refreshments can it impair their independence? what about the placing of reliance on the figures that were collected from us.please also comment on these if you can

[zeal]

were given an equivalent of about 85 dollars each to buy some refreshments during the period of stocktake (7 days).does this 85 dollars amount to a modest gift or this could have impaired their independence.

dear Viv,

According to the fact given by you, a person is getting 12 dollars per day basis. In my view independece is not impaired:
1. if the organisation does not provide meal and audit staff need to manage by self.
2. if there is existence of system to provide out of pocket expenses to the audit staff by the client.

If both of above point does not match then there is possibility of impairment of independence.

This is from my side Viv. Can any friend can add somethin in it?

[Annie]

HI Vivi,

Sorry to write so late.

I think the external auditor has to rely on the work of others and in that he has to mostly rely on the work of the internal auditor as you must be knowing that the work of internal and external auditors varies and the external auditor mainly focuses on the truth and fairness of the financial statements which can be influences by many factors and one of the main reason is the internal control system. The external auditor highly relies on the internal auditor for the verification and analysis of the internal control system. The external auditor test checks the work to find out how far he can rely on teh work of the internal auditor. If he finds that it is ok to rely on the work of the internal auditor then he just test checks randomly. The areas which he finds that are more sensitive or can have great impact onthe financial statements, he would check it more intensively. Therefore the external auditor took your feedback to test how far they cna rely on your work and how much they should contribute in that particular work. They also checked the high value inventory intensively because any mistake or error in it would affect the financial statements hugely. Plus as Zeal said it is feasilbel to check them intensively as their quantity is less and they are slow moving.

The allowances is questionalble part and even I felt the same when I used to go out on audits, why the organisations treated the external audit team more esteemly then the internal audit team. This can be a reason to affect independence. ( but not necessary)

I hope this helps

Annie

[zeal]

Dear friends,

From our course book we have got to know how gifts affects independence of external auditors and mostly of audit staffs.
I hope most of our friends get confused regarding how to treat this matter. The benchmark of amount and quantity of gifts is always confusing. So let's hope some one from gtg people will help us to rescue form this confusion in exam time.