Substantive Procedures for Faultiy Inventory Flashcards
Obtain a breakdown…
Obtain a breakdown of the damaged goods held in inventory and returned from customers and cast to confirm its accuracy
From the breakdown…
From the breakdown, agree damaged goods quantities manufactured since June to production records; and agree to sales records the quantities sold
Agree on a sample basis…
Agree on a sample basis the returns from customers as per the breakdown back to sales returns documentation to confirm the existence of the returns quantities
Discuss with management the current status…
Discuss with management the current status of their plans for this product line and whether they are able to recitfy damage and then sell the goods on
If the damaged inventory…
If the damaged inventory has been rectified and sold past year end, agree to the sales invoice to assess NRV in line with the new cost of the product
Agree the cost of damaged goods…
Agree the cost of damaged goods to supporting documentation to confirm raw material cost, labour cost and any overheads attributed to the cost
Discuss with management if goods…
Discuss with management if goods have been written down, if so follow through the write down to the inventory valuation to confirm
Inspect monthly board meeting minutes…
Inspect monthly board meeting minutes from month onwards to obtain further info regarding the faulty paint and its possible resale value
