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SP - Inventory.docx - SP Inventory Audit Procedures Before...

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SP - Inventory Audit Procedures Before, During &

After inventory count. (From Auditor
Perspective)Before ( few days b4 inventory count )
1.Inspect Stock Count Instructions before inventory
count to understand details such as date, count team,
count procedures, etc. 2.Discuss with management to
understand the nature of the inventory that will be
counted.3.Review / Inspect previous year’s inventory
working paper on inventory count to have an
understanding about issues surrounding inventory.
( same issue may repeat this year during inventory
count)4.Obtain the latest inventory listing from the
system and select samples of inventory to be counted
later.( client will count everything, auditor will counts
base on samples )5.Discuss with warehouse Head to
understand how the count is going to be conducted.( to
understand the control procedures )** No. 1 – 5 are
not TOC, not SP, just some preparation audit
procedure.
During ( on the inventory count day )1.Observe
whether the counting staff (client) are performing the
inventory count as per inventory count
instruction.2.Observe whether there are any
movements of inventory from and to the
warehouse.3.Observe whether the staff performing the
count are independent from the warehouse
staff.4.Inspect inventory count sheet to see if there are
sequentially pre-numbered.5.Inspect inventory count
sheet to see if they have been fill up in ink and not
pencil.6.Observe whether inventories in poor
condition have been brought to a centre
location.7.Observe whether all the inventory areas are
being tagged after there are
counted.CompletenessInspect samples of inventory
from physical floor to the inventory listing. ( Note 2 )
ValuationPhysically inspect some of the inventory to
see if it is in the good condition.( if not good
condition, client need to write off inventory amount )
ExistenceInspect samples of inventory from the
inventory list ( linked to the FS ) to the physical
inventory. ( Note 1 ) Inspect samples of inventory
from physical floor to the inventory listing. ( Note 2 )
Note 1 : If the inventory is in the list but not in the
floor that means the inventory in the FS maybe
OVERstated. ( List to floor test )Note 2 :If the
inventory is in the floor but not in the list that the list
at FS is UNDERstated in term of inventory. ( Floor to
list test )
After ( Few weeks after inventory count during final
audit ) ** Memorise !1.Compare CY Inventory
Balance with LY Balance & Investigate significant
fluctuations.CompletenessObtain Confirmation
Letter for inventory held at 3rdparty warehouse,
toconfirm quantity, etcValuationCalculate Inventory
Turnover Days / Ratios & Compare with LY &
Investigate significant fluctuation. ( Note 3 )Obtain
the latest Inventory Listing ( linked to FS ) , Compare
it with the final stock count sheet to confirm that
quantities are correct.
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Term
Fall
Professor
NoProfessor
Tags
Cost Accounting, Ly, Inventory Count

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