During the observation of the physical inventory count, What should the auditor perform ?
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total answers (1)
total answers (1)
Accounting
- Ensure that no production is scheduled. Or, if production is scheduled, ensure that proper controls are established for movement between departments in order to prevent double counting.
- Ensure that there is no movement of goods during the inventory count. If movement is necessary, the auditor and entity personnel must ensure that the goods are not double counted and that all goods are counted.
- Make sure that the entity's count teams are following the inventory count instructions.
- Ensure that inventory tags are issued sequentially to individual departments. If the entity uses another method of counting inventory, such as detailed inventory listings, the auditor should obtain copies of the listings prior to the start of the inventory count.
- Perform test counts and record a sample of counts in the working papers
- Obtain tag control information for testing the entity's inventory compilation. Tag control information includes documentation of the numerical sequence of all inventory tags and accounting for all used and unused inventory tags.
- Obtain cutoff information, including the number of the last shipping and receiving documents issued on the date of the physical inventory count.
- Observe the condition of the inventory for items that may be obsolete, slow moving, or carried in excess quantities.
- Inquire about goods held on consignment for others or held on a "bill-and-hold" basis. The auditor must also inquire about goods held on consignment for the entity.
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