Page 100 - Auditinf Electronic System

4. Classification: all inventory items are correctly classified
o Verify the classification into raw materials, WIP, and finished goods,
by comparing description in inventory tags with Inventory listing.
o Examine actual description of tags and compare with actual inventory
for raw material, WIP, finished goods.

5. Cutoff: Cutoff for inventory is correct, information obtained to make sure
sales and inventory purchases are recorded in the proper period.
o Record in the audit files for subsequent follow-up the last shipping
document number used at year-end.

o Make sure the inventory for the above item was excluded from the
physical count

o Review shipping area for inventory set aside for shipment but not
counted.

o Record in the audit files for subsequent follow-up the last receiving
report number used at year-end.

o Make sure the inventory for the above item was included in the physical
count.

o Review receiving area for inventory that should be included in the
physical count.

6. Right and obligations: the client has the right to inventory recorded
o Inquire about consignment or customer inventory included on client’s
premises.

o Make sure the inventory for the goods held in consignment was
excluded from the physical count.

o Be alert for inventory that is set aside or specifically marked as
indications of non-ownership. ( goods in transit )

o Trace inventory recorded tags identified as non-owned during the
physical observation to the inventory listing schedule to make sure
these have not been included.

o Review contracts with suppliers and customers and inquire of
management for the possibility of the inclusion of consigned or other
non-owned inventory, or the exclusion of owned inventory.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬