Planning the Inventory Count

Question 1

What is done before the physical inventory count?

Answer 1

Auditors should ensure audit coverage of count is appropriate, and client’s count instructions have been reviewed

Question 2

Consider when planning attendance of the inventory count (material misstatement)

Answer 2

Risks of material misstatement of inventory

Question 3

Consider when planning attendance of the inventory count (controls)

Answer 3

Internal controls related to inventory

Question 4

Consider when planning attendance of the inventory count (adequate procedures)

Answer 4

Whether adequate procedures are expected to be established and proper instructions issued for counting

Question 5

Consider when planning attendance of the inventory count (timing)

Answer 5

The timing of the count

Question 6

Consider when planning attendance of the inventory count (inventory system)

Answer 6

Whether the entity maintains a perpetual inventory system

Question 7

Consider when planning attendance of the inventory count (Location)

Answer 7

Locations at which inventory is held

Question 8

Consider when planning attendance of the inventory count (expert)

Answer 8

Whether the assistance of an auditor’s expert is required