Inventory and warehousing and cash cycle tests of controls essays and research papers inventory and warehousing and cash cycle tests of controls design tests of controls , substantive tests of transactions, and analytical procedures for the following apollo shoes cycles : o inventory and warehousing cycle o cash cycle 1. Key internal controls for your inventory are: fence and lock the warehouse the single most important inventory control is simply locking down the warehouse this means that you construct a fence around the inventory, lock the gate, and only allow authorized personnel into the warehouse organize the inventory it may not seem like a control to simply organize the inventory in the warehouse, but if you cannot find it, you cannot control it. A company's major control over the inventory balance is the annual inventory count it is generally accepted that companies should complete a physical count of all of its inventory at least once a year this can be done in two ways one method is to count all of the inventory at once.
Audit of inventory and warehousing cycle - download as word doc (doc / docx), pdf file (pdf), text file (txt) or read online (the company holds or controls the rights to inventory) enquire from management as to whether there is any inventory held on consignment for other parties enquire from management of any inventory billed but not. Overall objective in the audit of the inventory and warehousing cycle is to provide assurance that the financial statements fairly account for raw materials, work-in-process, finished goods inventory, and cost of goods sold. Auditor tests of physical controls over raw materials, work-in-process, and finished goods are performed by: examination observation inquiry inventory and warehousing cycle d) sales and collection cycle d) units and unit costs of inventory purchased, sold, and on hand.
Inventory is a large part of the auditing process for companies with physical goods inventory is a substantial portion of total assets for many companies in addition, there are many complex accounting issues surrounding the topic of inventory valuation companies have a temptation to overstate inventory and thus overstate assets.
Start studying chapter 21: inventory and warehousing cycle learn vocabulary, terms, and more with flashcards, games, and other study tools why is the inventory cycle the most time consuming and complex part of the process test controls to see how reliable they are. This playlist covers auditing the inventory cycle and warehousing cycle including substantive testing, test of internal control and analytical procedures. Audit of the inventory and warehousing cycle chapter 21 warehousing inventory and warehousing ©2012 prentice hall business publishing, auditing 14/e, arens/elder/beasley 21 - 8 design tests of controls and substantive tests of transactions for the cost accounting system. Test high-value items if there are items in the inventory that are of unusually high value, the auditors will likely spend extra time counting them in inventory, ensuring that they are valued correctly, and tracing them into the valuation report that carries forward into the inventory balance in the general ledger test error-prone items if the auditors have noticed an error trend in prior years for specific inventory items, they will be more likely to test these items again. Audit of inventory and warehousing cycle ias 2 standard (the company holds or controls the rights to inventory) enquire from management as to whether there is any inventory held on consignment for other parties enquire from management of any inventory billed but not delivered to customers obtain a listing of imported inventory in transit.
The inventory and warehousing cycle can be thought of as having two separate but closely related systems, one involving the actual physical flow of goods, and the other the: a) related costs b) storage of the goods. B) payroll and personnel cycle c) inventory and warehousing cycle d) sales and collection cycle auditors need to understand the client's physical inventory count controls before the count of the inventory begins so that: a) the auditors can accurately count and tag the inventory for the client. Audit of the inventory and warehousing cycle chapter 21 ©2012 prentice hall business publishing, design tests of controls and substantive tests of transactions for the cost accounting system inventory tests.
Audit of the inventory and warehousing cycle chapter 21 ©2008 prentice hall bbuussiinneessss ppuubblliisshhiinngg,, aauuddiittiinngg 1122//ee,, aarreennss//bbeeaasslleeyy//eellddeerr 21 - 1 2 learning objective 1 describe the business functions and the related documents and records in the inventory and warehousing cycle.