Damaged Goods are not accepted and inventory is appropriately valued

Question 1

What is risk (damaged)

Answer 1

That damaged/faulty goods are accepted

Question 2

What is control objectives (damaged)

Answer 2

Ensure that goods are only accepted if they are of the appropriate quality

Question 3

What is controls (damaged)

Answer 3

On receipt of goods, all items are to be verified to ensure they are in satisfactory condition

Question 4

What is tests of controls (damaged)

Answer 4

Observe the receipt of goods by staff to confirm the control is carried out

Question 5

What is risk (inventory)

Answer 5

That inventory is not valued at the lower of cost and net realisable value

Question 6

What is control objectives (inventory)

Answer 6

Ensure that inventory is properly stated at lower of cost and net realisable value

Question 7

What is controls (inventory) (standard)

Answer 7

Standard costs are to be regularly reviewed by management to ensure they are kept up to date

Question 8

What is controls (inventory) (managers)

Answer 8

Inventory managers should review inventory regularly to identify slow-moving, obsolete and excess inventory

Question 9

What is tests of controls (inventory) (standard costs)

Answer 9

Review the entity’s procedures for updating standard costs and test a sample of standard costs to determine whether they aprroximate to current cost

Question 10

What is tests of controls (inventory) (review)

Answer 10

Discuss the procedure for reviewing inventory with management

Question 11

What is tests of controls (inventory) (reports)

Answer 11

Inspect any reports which maangement have issued after the review has taken place