Page 98 - Auditinf Electronic System

e. Safeguarding assets: Adequate control over count sheets or tags used in
counting

f. Pricing Controls: over consistency of method used, and accurate application
and the lower of cost or market value achieved each year

the auditor associates the controls with the 6 objectives of auditing inventory
and warehouse transactions using Control Matrix.
The auditor Assesses control risk for each objective by evaluating the controls
and deficiencies for each objective.

▪ Identify the 6 objectives of auditing transactions (Occurrence, Completeness,
Posting and summarizing, classification and timing)

3. Design Substantive Tests of Transactions for Cost:
after performing the control tests for each objective, the auditor design and

perform the substantive tests to determine whether any monetary misstatements for
that objective exist in the transaction. But as the transactions are related mostly to
other cycles.

1- Occurrence: all recorded inventory and related costs occurred. (acquisition
and payment cycle)

2- Completeness: Are all are all inventory and related costs Are Recorded.
(acquisition and payment cycle)

3- Accuracy: are inventory and related costs Recorded accurately Auditor
depends on recalculations and comparison of information on
different documents, many tests can be performed here like:

▪ Compare the details on the invoices with receiving reports for description,
quantity, and customer identification.

▪ Examine purchase orders and receiving reports for the same information.

4- Classification: Are inventory and related costs Classified correctly.

▪ Clear classification of raw material, WIP and Finished Goods
5- Timing: all transactions recorded in the correct dates. (acquisition and payment

cycle, cash and collection cycle)

98 99
‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬