Académique Documents
Professionnel Documents
Culture Documents
include:
Often major item in the balance sheet & make up
largest item in the working capital. Located at different locations Diversity of items create difficulties; jewels, chemicals etc Difficulties in valuation; factors like obsolescence. Methods of valuation may differ
CLASSIFICATION OF INVENTORY
Depends on the nature of business
Eg. Retail/ wholesale merchandise on hand Eg. Servicing (hospital)- food, medicines and med.
Audit of Inventory
Refer to Figure 21-3, p.636
Acquire and record raw materials, labor and overhead Internally transfer assets and costs Ship goods and record revenue and costs Physically observe inventory
parties & ensure that such items are excluded from stock. For material amount, obtain confirmation from 3rd party. Select a sample of items from the final stock sheet and trace the copies of the rough stock sheets taken during stock-take Ensure that all sheets in the sequence recorded at the stock-take are available
whether
It has been correctly applied
It is an acceptable basis of valuation under FRS 102 It is consistent with previous years & co.s acc policy
3. Review WIP and ensure that Costs have been recorded correctly Review any profit taken in the light of work carried out (i.e. stage of completion), costs to date, expected costs to complete & contract value Adequate prov. has been made for any anticipated losses
numbers of all sheets used at the end of the count 3. Select a sample of items from completed stock sheets and check to ensure that the number has been recorded correctly
final audit
6. Ascertain whether any stock is held on behalf of 3rd party. If there is,
make sure it has been identified & excluded from the count
7. Note any old / damaged stock during the count. Ensure it is marked
Price Test
Inventory price test: all tests of the clients unit
prices to determine whether they are correct. Inventory compilation tests: all tests of the summarization of the physical quantities, the extension of price times qty, footing the inventory summary and tracing the total to GL.