Auditing Accountant -
The following audit procedures were performed in the audit of inventory to satisfy specific balance-related audit objectives as discussed. The audit procedures assume that the auditor has obtained the inventory count sheets that list the client's inventory. The general balance-related audit objectives are also included.
Audit procedures:
1. Trace selected quantities from the inventory list to the physical inventory to make sure that it exists and the quantities are the same.
2. Compare the quantities on hand and unit prices on this years inventory count sheet with those in the preceding year as a test for large differences
3. Test extend until prices times quantity on the inventory list, test foot the list, and compare the totaled to the general ledger
4. Question operating personal about the possibility of obsolete or slow-moving inventory.
5. Send letters directly to third parties who hold the clients inventory, and request that they respond directly to the audiotors
6. Select a sample of quantities of inventory in the factor warehouse and trace each item to the inventory count sheets to determine if it has been included and if the quantity and description are correct.
7. Examine sales invoices and contracts with customers to determine weather any goods are out on consignment with customers, Similarly, examine vendors invoices and contracts with vendors to determine whether and goods on the inventory listing are owned by vendors
General Balance-related audit objectives
Existence cutoff
Completes Detailed tie-in
Accuracy Realizable value
classification rights and obligation
A. Identify the type of audit evidence used for each audit procedures.
B. Identify the general balance-related audit objectives satisfied by each audit procedure.