The primary objective of a cpa’s observation of a client’s physical inventory count is to: ✅ [Update]
Thủ Thuật Hướng dẫn The primary objective of a cpa’s observation of a client’s physical inventory count is to: Mới Nhất
Lã Hiền Minh đang tìm kiếm từ khóa The primary objective of a cpa’s observation of a client’s physical inventory count is to: được Update vào lúc : 2022-09-30 07:07:06 . Với phương châm chia sẻ Kinh Nghiệm về trong nội dung bài viết một cách Chi Tiết 2022. Nếu sau khi Read tài liệu vẫn ko hiểu thì hoàn toàn có thể lại Comments ở cuối bài để Mình lý giải và hướng dẫn lại nha.Summary Table of Contents
- .09 Inventories.14 Inventories Held in Public Warehouses.15 Effect on the Auditor's Report
.01 Observation of inventories is a generally accepted auditing procedure. The independent auditor who issues an opinion when he has not employed them must bear in mind that he has the burden of justifying the opinion expressed.
Nội dung chính- ReceivablesInventoriesInventories Held in Public WarehousesEffect on the Auditor's ReportWhat is the main objective of observing inventory?What are the purposes of the auditors observation of the taking of the physical inventory?What is the objective of auditing of inventory?What is physical inventory observation?
.02 The purpose of this section is to provide guidelines for the independent auditor in observing inventories. This section relates only to observation of inventories and does not giảm giá with other important auditing procedures which generally are required for the independent auditor to satisfy himself as to these assets.
Receivables
[.03-.08] [Paragraphs deleted.]
Inventories
.09 When inventory quantities are determined solely by means of a physical count, and all counts are made as of the balance-sheet date or as of a single date within a reasonable time before or after the balance-sheet date, it is ordinarily necessary for the independent auditor to be present the time of count and, by suitable observation, tests, and inquiries, satisfy himself respecting the effectiveness of the methods of inventory-taking and the measure of reliance which may be placed upon the client's representations about the quantities and physical condition of the inventories.
.10 When the well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts, the auditor's observation procedures usually can be performed either during or after the end of the period under audit.
.11 In recent years, some companies have developed inventory controls or methods of determining inventories, including statistical sampling, which are highly effective in determining inventory quantities and which are sufficiently reliable to make unnecessary an annual physical count of each item of inventory. In such circumstances, the independent auditor must satisfy himself that the client's procedures or methods are sufficiently reliable to produce results substantially the same as those which would be obtained by a count of all items each year. The auditor must be present to observe such counts as he deems necessary and must satisfy himself as to the effectiveness of the counting procedures used. If statistical sampling methods are used by the client in the taking of the physical inventory, the auditor must be satisfied that the sampling plan is reasonable and statistically valid, that it has been properly applied, and that the results are reasonable in the circumstances.
.12 When the independent auditor has not satisfied himself as to inventories in the possession of the client through the procedures described in paragraphs .09 through .11, tests of the accounting records alone will not be sufficient for him to become satisfied as to quantities; it will always be necessary for the auditor to make, or observe, some physical counts of the inventory and apply appropriate tests of intervening transactions. This should be coupled with inspection of the records of any client's counts and procedures relating to the physical inventory on which the balance-sheet inventory is based.
.13 The independent auditor may be asked to audit financial statements covering the current period and one or more periods for which he had not observed or made some physical counts of prior inventories. He may, nevertheless, be able to become satisfied as to such prior inventories through appropriate procedures, such as tests of prior transactions, reviews of the records of prior counts, and the application of gross profit tests, provided that he has been able to become satisfied as to the current inventory.
Inventories Held in Public Warehouses
.14 If inventories are in the hands of public warehouses or other outside custodians, the auditor ordinarily would obtain direct confirmation in writing from the custodian. If such inventories represent a significant proportion of current or total assets, to obtain reasonable assurance with respect to their existence, the auditor should apply one or more of the following procedures as he considers necessary in the circumstances.
Test the owner's procedures for investigating the warehouseman and evaluating the warehouseman's performance.Obtain an independent accountant's report on the warehouseman's control procedures relevant to custody of goods and, if applicable, pledging of receipts, or apply alternative procedures the warehouse to gain reasonable assurance that information received from the warehouseman is reliable.Observe physical counts of the goods, if practicable and reasonable.If warehouse receipts have been pledged as collateral, confirm with lenders pertinent details of the pledged receipts (on a test basis, if appropriate).Effect on the Auditor's Report
.15 For a discussion of the circumstances relating to receivables and inventories affecting the independent auditor's report, see paragraphs .07 and .51 of AS 3105, Departures from Unqualified Opinions and Other Reporting Circumstances.
What is the main objective of observing inventory?
Objective of inventory observation: This is to ensure that there is no conflict of interest involved. However, during the counting process, the auditor might request to recount certain items that are noted as unusual by them.What are the purposes of the auditors observation of the taking of the physical inventory?
Observing physical inventory is a key step in meeting the required standard of field work. It also gives information and proof that it was done correctly and numbers are accurate. Auditors check to make sure that inventory is: real, quantity is accurate and it is in usable condition!What is the objective of auditing of inventory?
The purpose of an inventory audit is to ensure accuracy between actual stock quantity and your financial records. Regular inventory audits increase understanding of your stock flow, help you calculate profits and losses accurately, and keep your business running smoothly.What is physical inventory observation?
An inventory observation is the oversight of a client's inventory counting process by an outside auditor. This oversight work includes a number of tasks, including the following: Verifying that all inventory was counted. Testing a sample of the counts made by client employees.
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