Inventory Flashcards Preview

6-audit evidence -specific audit areas > Inventory > Flashcards

Flashcards in Inventory Deck (6)
Loading flashcards...
1
Q

observation of inventory is a dual purpose test

A

internal control objectives-comparing inventory of what is on hand to the records that say what is on hand

substantive objectives-gathering evidence to evaluate the dolar balance reported for inventory

2
Q

the______assertion is the most important assertion for assets

A

existence

3
Q

auditor should focus on count tag (tags client uses to number inventroy)

A

auditor should conduct own count and compare it to count tag. tags should be prenumbered and the sequence should be accounted for.

quantities-auditor performs own test counts and compares to clients

price test-verify the reasonableness of clients cost/unit

extensions-test the quantity xcost/unit (check total and agree to clients listing)

4
Q

for completeness assertion perform a _____ test for sales and purchases a few days before and after year end.

sales cuttoff - compare sale entries to sale journal

purchase-inspect shipments (receiving report) and compare to purchase journal entries.

A

cutoff

5
Q

rights and obligations

A

inquire if inventory was used as collateral in debts. read debt aggreement.

shipped on consignment but counted as sale

6
Q

valuation issues

A

analytical procedures- perform analycital procedures to identify excess or slow moving (inventory turnover ration). be attentive to dusty boxes. inventory price may have to be reduced