Procedures and Objectives for Inventory

Question 1

Determine that the presentation and disclosure of inventories and cost of goods sold is adequate.

Answer 1

Review drafts of the financial statements.

Question 2

Establish the existence of ending inventory.

Answer 2

Select a sample of recorded items on count sheets during the physical inventory count and determine that items are on hand.

Question 3

Establish the completeness of inventories.

Answer 3

Select a sample of items during the physical inventory count and determine that they have been included on count sheets

Question 4

Establish that the client has right to the recorded inventories.

Answer 4

Select a sample of recorded items and examine supporting vendors’ invoices and contracts.

Question 5

Establish the accuracy of cost amounts of inventories.

Answer 5

Select a sample of recorded items and examine supporting vendors’ invoices and contracts.