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The client received a large shipment of inventory on December 31st during the inventory observation. What...

  1. The client received a large shipment of inventory on December 31st during the inventory observation. What procedures should the auditor perform to verify that the acquisition of inventory is properly accounted for?
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Answer #1

When inventory is material then auditor shall obtain sufficient and appropriate evidence with respect to existence and condition of inventory by

- Attendance at physical inventory count

- Examining entity's final inventory records & comparing them with actual count result.

and should evaluate Internal Control, should ovserve management count procedure and inspect inventory.

An auditor shall alos perform additional procedure with respect to changes in inventory between count date and balance sheet date. He shall make some count on alternative date and perform procedure on intervening transaction.

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

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