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Audit Program Inventory Objectives

This document outlines an audit program for inventories. The objectives are to verify that inventories exist at year-end, all transactions are recorded properly, inventory listings are accurate, the company has ownership of inventory, inventories are properly valued, and inventories are properly presented in financial statements. The audit procedures include observing the physical inventory count, confirming inventories held by third parties, testing the inventory listing for accuracy, reviewing cutoff of transactions, testing inventory pricing, and evaluating financial statement disclosures.

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255 views2 pages

Audit Program Inventory Objectives

This document outlines an audit program for inventories. The objectives are to verify that inventories exist at year-end, all transactions are recorded properly, inventory listings are accurate, the company has ownership of inventory, inventories are properly valued, and inventories are properly presented in financial statements. The audit procedures include observing the physical inventory count, confirming inventories held by third parties, testing the inventory listing for accuracy, reviewing cutoff of transactions, testing inventory pricing, and evaluating financial statement disclosures.

Uploaded by

nicole bancoro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AUDIT PROGRAM FOR INVENTORIES

Name of Client:____________________________________ Audit Date: ___________________

W.P. Actual Est.


Ref. By Time Time

Audit Objectives:

To determine that:
a. Inventories exist at year-end and represent items held
for sale in the ordinary course of business.
b. All transactions related to inventory are recorded in
the proper accounting period.
c. The inventory listings are accurately complied and
inventory quantities include all items on hand and
in transit.
d. The company has legal title or ownership rights to
inventory items and inventories exclude items billed
to customers or owned by others.
e. The inventories are properly stated with respect to
cost
determined by an acceptable method consistently
applied; and slow-moving, excess, defective, and
obsolete items identified and reduced to net realizable
value if lower than cost.
f. The inventories and cost of goods sold are presented
and classified in the financial statements in
accordance with PAS/PFRS.

Audit procedures:
1. Observe the taking of physical inventory and conduct test
counts.
2. Confirm inventories ion public warehouse and with
consignees.
3. Obtain a final inventory listing from the client.
a. Trace test counts made during the inventory physical
count observation into inventory listing.
b. Test the clerical accuracy of the final inventory
listing.
4. Review the year-end cutoff of purchases and sales
Transactions.
5. Test numerical sequence of inventory purchase
requisition.
6. Review entries to cost of goods sold.
7. Perform analytical review related to inventories and cost
of goods sold.
8. Make inquiries of management regarding inventory
ownership and examine consignment agreements.
9. Evaluate the bases and methods of inventory pricing.
10.Vouch and test inventory pricing.
11.Check inventory for quality and/or obsolescence.
12.Determine the existence of pledged inventory.
13.Evaluate financial statement presentation of inventories
and
cost goods sold, including the adequacy of disclosure.
14.Obtain inventory representation letter from client.
Audit conclusion:
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________

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