Audit Procedures for Inventory (2)

Question 1

Accuracy, valuation and allocation (general listing)

Answer 1

Obtain a copy of inventory listing agree the totals to the general ledger

Question 2

Accuracy, valuation and allocation (mathematically)

Answer 2

Cost the inventory listing to ensure it is mathematically correct

Question 3

Accuracy, valuation and allocation (invoices)

Answer 3

Vouch a sample of inventory items to suppliers’ invoices to ensure it is correctly valued

Question 4

Accuracy, valuation and allocation (standard costing)

Answer 4

When standard costing is used, obtain a copy of standard cost card

Question 5

Accuracy, valuation and allocation (sample of purchases)

Answer 5

Vouch a sample of purchases costs to invoices and labour rates to payroll records

Question 6

Accuracy, valuation and allocation (amount of labour)

Answer 6

Amount of labour time taken per unit/batch with production staff to ensure standard cost is correctly valued

Question 7

Accuracy, valuation and allocation (raw materials)

Answer 7

For materials, agree the valuation of raw materials to invoices and price lists

Question 8

Accuracy, valuation and allocation (basis of valuation)

Answer 8

Confirm that an appropriate basis of valuation (e.g. FIFO) is being used by discussing with management

Question 9

Accuracy, valuation and allocation (wage records)

Answer 9

For labour costs, agree costs to wage records

Question 10

Accuracy, valuation and allocation (actual costs and production)

Answer 10

Review standard labour costs in the light of actual costs and production