Rex Duhaylungsod

[AUDIT PROBLEM ASSIGNMENT]

WORK PROGRAM FOR INVENTORIES

Name of Client:__________________________________________Audit Date: _____________
W.P Ref. Audit Objectives: To determine that: 1. Inventories included n the statement of financial position physically exists. 2. Inventories represent items held for sale in the ordinary course of business, in the process of production for such sale, or in the form of material or supplies t be used in the production process or in the rendering of services. 3. Inventory quantities include products, materials, and supplies owned by the company (on hand, in transit, or stored at outside locations). 4. The entity has legal title or similar rights of ownership to the inventories. 5. Inventories are properly stated at the lower of cost and net realizable value. 6. Inventories are properly described and classified in the financial statements and disclosures are adequate. Audit Procedures: 1. Observe physical inventory counts. Test shipping and receiving cutoff procedures. Account for all inventory tags and count sheets used in recording the physical inventory counts. Test the clerical accuracy of inventory listings. Trace test counts recorded during the physical inventory observation to the inventory listing. Reconcile physical counts to perpetual records and general ledger balances and investigate significant variations. Test inventory transactions between a preliminary physical inventory date and the end of reporting period. 2. Obtain confirmation of inventories at locations outside the entity. 3. Review perpetual inventory records, production records, and purchasing records for indications of current activities. 4. Analytically review the relationship of inventory balances to recent purchasing, production, and sales activities, and to anticipated sales volume. 5. Examine paid vendors invoices, consignment agreements, and contracts. By Actual Time Est. TIme

Rex Duhaylungsod

[AUDIT PROBLEM ASSIGNMENT]