Question

The audit of the inventory and warehousing cycle will be affected by the results from other business processes. Identify the "other" business cycles and how they impact the audit of inventory.

Answer 1

Business Cycles / processes affecting Inventory and warehousing cycle :

1. Production cycle : Production plan widely affect inventory audit. When to conduct inventory and warehousing audit depends upon no. of units or batches to be produced for the particular period.

2. Revenue Cycle (Customer Requirement) : Inventory cycle is dependent upon production cycle and production cycle is depend upon customer demand / requirement.

3. Procurement cycle : Purchase of raw material and packing material is affecting inventory and warehousing cycle.