Chapter 13_ Auditing theChapter
Inventory
13_Management
Auditing theChapter
Process
Inventory
13_
–
Management
Auditing
Audit Procedures
the Process
Inventory
& –
Controls
Management
AuditStudy
Procedures
Process
Guide.pdf
& –
Controls
AuditStudy
Procedures
Guide.pdf
& Controls Study Guide.pdf
Chapter 13: Auditing the Inventory
Management Process – Audit
Procedures & Controls Study Guide
Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
Chapter 13_ Auditing theChapter
Inventory
13_Management
Auditing theChapter
Process
Inventory
13_
–
Management
Auditing
Audit Procedures
the Process
Inventory
& –
Controls
Management
AuditStudy
Procedures
Process
Guide.pdf
& –
Controls
AuditStudy
Procedures
Guide.pdf
& Controls Study Guide.pdf
,Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
Terms in this set (69)
Inventory is a central link between three major 1. Purchasing Process
accounting processes: 2. Human Resource / Payroll Process
3. Revenue Process
Purchasing Process and how it connects to Controls the acquisition and payment of raw materials
inventory
Human Resource / Payroll Process and how it Controls assignment of direct and indirect labor costs to inventory
connects to inventory
Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
, Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
Revenue Process and how it connects to inventory Controls the sale of finished goods
Inventory follows a “cradle-to-grave” cycle: Purchased → Stored → Produced → Sold → Shipped to customers
Why Inventory Is a High-Risk Audit Area 1. Quantity is easier to verify → You can physically count items. (Easy part)
2. Valuation is much harder → Assigning the correct cost to inventory is
complicated. (More difficult)
Auditors especially worry about other 1. Obsolescence
troublesome valuation issues related to inventory 2. Lower of Cost or Market
such as:
Obsolescence Inventory that is outdated or unsellable
Lower of Cost or Market Inventory must be valued at the lower of cost or net realizable value
Key Segregation of Duties (Inventory Management Segregation of duties is critical in inventory because inventory is highly
Process) vulnerable to theft and manipulation.
Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
Inventory
13_Management
Auditing theChapter
Process
Inventory
13_
–
Management
Auditing
Audit Procedures
the Process
Inventory
& –
Controls
Management
AuditStudy
Procedures
Process
Guide.pdf
& –
Controls
AuditStudy
Procedures
Guide.pdf
& Controls Study Guide.pdf
Chapter 13: Auditing the Inventory
Management Process – Audit
Procedures & Controls Study Guide
Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
Chapter 13_ Auditing theChapter
Inventory
13_Management
Auditing theChapter
Process
Inventory
13_
–
Management
Auditing
Audit Procedures
the Process
Inventory
& –
Controls
Management
AuditStudy
Procedures
Process
Guide.pdf
& –
Controls
AuditStudy
Procedures
Guide.pdf
& Controls Study Guide.pdf
,Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
Terms in this set (69)
Inventory is a central link between three major 1. Purchasing Process
accounting processes: 2. Human Resource / Payroll Process
3. Revenue Process
Purchasing Process and how it connects to Controls the acquisition and payment of raw materials
inventory
Human Resource / Payroll Process and how it Controls assignment of direct and indirect labor costs to inventory
connects to inventory
Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
, Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
Revenue Process and how it connects to inventory Controls the sale of finished goods
Inventory follows a “cradle-to-grave” cycle: Purchased → Stored → Produced → Sold → Shipped to customers
Why Inventory Is a High-Risk Audit Area 1. Quantity is easier to verify → You can physically count items. (Easy part)
2. Valuation is much harder → Assigning the correct cost to inventory is
complicated. (More difficult)
Auditors especially worry about other 1. Obsolescence
troublesome valuation issues related to inventory 2. Lower of Cost or Market
such as:
Obsolescence Inventory that is outdated or unsellable
Lower of Cost or Market Inventory must be valued at the lower of cost or net realizable value
Key Segregation of Duties (Inventory Management Segregation of duties is critical in inventory because inventory is highly
Process) vulnerable to theft and manipulation.
Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf Chapter 13 Auditing the Inventory Management Process.pdf
