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What are some examples of substantive tests and audit procedures for inventory?

What are some examples of substantive tests and audit procedures for inventory?

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Answer #1

These tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate.

tests for inventory are as follows -

Observe the period-end physical inventory count

Confirm the validity of inventory valuation calculations like verify the correct application of lower-of-cost-or-market value.

Verify that ending inventory on the balance sheet is identical to ending inventory in the Cost of Goods Sold section.

other audit procedures may include -

Cutoff analysis.

Finished goods cost analysis.

Match invoices to shipping log

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