Audit procedures relating to inventory count:
- Check that inventory figure in the SFP agree to the invoice
- Check that staff who is responsible for inventory count is equipped with pre numbered sequenced sheets and are working in pairs
- No movement of inventory takes places during the inventory count
- Inventory which has been counted should be marked.
- Check that inventory which belongs to the third parties are seperately identified.
- Confirm that counters are aware of any item which is damaged and should be written down.
- Gain overall impression of the inventory level to assess its materialness.
- Check that all inventory sheets issued have been accounted for at year end
- Take copies of the inventory count and retain on the working paper.
- Obtain cutt off details by keeping a year end sales invoice with the last good in record count.
Reasons to Carry out the above audit procedures:
To ensure proper valuation espically in manufacturing industries where inventory is very material figure
- This will ensure proper valuation of inventory
- To ensure that inventory records are not mismatched which will create confusion and may lead to double counting of inventory.Working in teams also deter fraud and prevent error
- This would again mean doublecounting of inventories and staff may get confused and would also make it difficult to assess proper cut of procedures.
- This will prevent double counting of inventory by counters
- As THIRD PARTY inventory doesnt belongs to us and shouldnt be counted as our inventory
- They need to be written down to there value and should be identified seperately.
- This will help the auditor to assess the level of procedures to be applied to gain further assurance
- This would ensure completness of inventory as if any sheets are missing that would mean that those inventory wouldnt be counted and figures misstated.
- This will prevent managment later manipulating with the figures as if they have those sheets in possession then they can steal some inventory and cut it out on inventory sheet and present it to the auditor!! So Auditor will have an xerox copy.
- This will provide assurance that proper cut off procedures have been applied. For examples The last sales invoce means that the goods have been dispatched to customer and so shouldnt be included in inventory count. And If has been purchased or sold AFTER SFP date then it shouldnt be included in the inventory count.
- About Us
- Book Shop