Auditing and Assurance Services (16th Edition)
question 7-29
objective (7-4) The following audit procedures were performed inthe audit of inventory to satisfy specific balance-related auditobjective as discussed in chapter 6. The audit procedures assumethat the auditor has obtained the inventory count sheets that listthe clients inventory. The general balance-related audit objectivesfrom chapter 6 are also included.
Audit procedures
1) select a sample of inventory items in the factory warehouseand trace each item to the inventory count sheets to determine ifit has been included and if the quantity and description arecorrect.
2) trace selected quantities from the inventory list to thephysical inventory to make sure that it exists and the quantitiesare the same.
3) compare the quantites on hand and unit prices on this yearsinventory count sheets with those in the preceding year as a testfor large differences.
4) test the extension of unit prices times quantity on theinventory list for a sample of the inventory items, test foot thelist, and compare the total to the general ledger.
5) send letters directly to third parties who hold the clientsinventory, and request that they respondf directly to theauditors.
6) examine sales invoices and contracts with customers todetermine whether any goods are out on consignment with customers.Similarly, examine vendors in-voices and contracts with vendors todetermine whether any goods on the inventory listing are owned byvendors.
7) question operating personnel about the possibility ofobsolete or slow-moving inventory.
General balance-related audit objective
existence,completeness,accuracy,classification,cutoff,detailtie-in,realizable vaule,rights and obligations
a) identify the type of audit evidence used for each aduitprocedure.
b) identify the general balance-related audit objective orobjectives satisfied by each audit procedure.
Auditing and Assurance Services (16th Edition)
question 7-29
objective (7-4) The following audit procedures were performed inthe audit of inventory to satisfy specific balance-related auditobjective as discussed in chapter 6. The audit procedures assumethat the auditor has obtained the inventory count sheets that listthe clients inventory. The general balance-related audit objectivesfrom chapter 6 are also included.
Audit procedures
1) select a sample of inventory items in the factory warehouseand trace each item to the inventory count sheets to determine ifit has been included and if the quantity and description arecorrect.
2) trace selected quantities from the inventory list to thephysical inventory to make sure that it exists and the quantitiesare the same.
3) compare the quantites on hand and unit prices on this yearsinventory count sheets with those in the preceding year as a testfor large differences.
4) test the extension of unit prices times quantity on theinventory list for a sample of the inventory items, test foot thelist, and compare the total to the general ledger.
5) send letters directly to third parties who hold the clientsinventory, and request that they respondf directly to theauditors.
6) examine sales invoices and contracts with customers todetermine whether any goods are out on consignment with customers.Similarly, examine vendors in-voices and contracts with vendors todetermine whether any goods on the inventory listing are owned byvendors.
7) question operating personnel about the possibility ofobsolete or slow-moving inventory.
General balance-related audit objective
existence,completeness,accuracy,classification,cutoff,detailtie-in,realizable vaule,rights and obligations
a) identify the type of audit evidence used for each aduitprocedure.
b) identify the general balance-related audit objective orobjectives satisfied by each audit procedure.
