Audit Procedures for Inventory (4)

Question 1

Accuracy, valuation and allocation (standard costs)

Answer 1

Compare the current year standard costs to previous uear after considering current conditions

Question 2

Accuracy, valuation and allocation (standard manufacturing)

Answer 2

Compare actual manufacturing overhead costs with budgeted or standard manufacturing overhead costs

Question 3

Accuracy, valuation and allocation (mathematical)

Answer 3

Obtain a copy of inventory listing and cast it, and test the mathematical extensions of quantity multiplied by price

Question 4

Accuracy, valuation and allocation (trace test counts listing)

Answer 4

Trace test counts back to the inventory listing

Question 5

Accuracy, valuation and allocation (general ledger)

Answer 5

If entity has adjusted the general ledger to agree with the physical inventory count amounts, agree the two amounts

Question 6

Accuracy, valuation and allocation (continuous inventory system)

Answer 6

Where a continuous inventory system is maintained, agree the total on the inventory listing to continuous inventory records, using automated tools and techniques