Chapter 7 - Inventory

Question 1

What does an auditor do at the inventory count?

Answer 1

Get a copy of inventory listing, select a sample (statistical and non-statistical)
test these items to the shelves - completeness
Ensure inventory is of value - valuation
Ask manager for written down inventory

Question 2

What happens at the final audit

Answer 2

Check the inventory figures to the balances in the FS
Material costs, labour costs (time sheets), overheads etc

Lower of cost or Net realisable value

Question 3

Cut off test

Answer 3

Goods received notes and goods dispatched notes in the year, with inventory in stock!