Page 99 - Auditinf Electronic System

6- Posting and summarization: (acquisition and payment cycle, cash and
collection cycle.) all purchased raw materials on account included
in A/P master file and all sold products on account included in A/R
master file

Third: Design test of Details for Inventory and Costs

1-Inventory and Costs

Auditors must verify that the physical counts or perpetual record quantities are
correctly priced and compiled. The objectives of auditing the Inventory balance and
costs of inventory (Cost of goods sold) are:

1. Existence: Inventory items in inventory lists actually exist
o Tracing inventory listed in master file to inventory tags and auditor`s
counts.

2. Completeness: all Existing inventory is counted
o Physical examination of inventory to make sure all is tagged.

o Count tagged items to make sure all included.

o Inquire whether there is inventory in other locations

3. Accuracy: Inventory counted accurately and inventory items are accurate.
o Recount the client`s count to make sure the recorded counts are
accurate on the tags
o Compare physical count with inventory master file
o Tracing inventory listed in master file to inventory tags and auditor`s
counts for quantity and description.
o Perform price tests for inventory
▪ Proper costing method used (FIFO- W.A)
▪ Consistent application across years
▪ Accurate calculations
▪ Lower of cost or market
▪ Allocation rate of manufacturing overhead properly performed.
▪ Unit cost properly calculated.

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