Three substantive audit procedure that can be performed to ensure that the inventory is measured correctly are:
1. Procure a list of goods that have been sold close to year end and ensure that these finished goods are excluded from the inventory records.
2. For a sample of stock in hand at year end, tally the cost as per the records to a recent purchase invoice in order to confirm that the cost is correctly stated.
3. Review a few sales made just after the year end in order to ensure that NRV of the said inventory is above cost, or if a write down is required.
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