How to Audit Inventory
Audit inventory using a structured approach that addresses one of the most judgment-intensive areas of the balance sheet. This course explains inventory’s key characteristics from an audit perspective and then walks through the specific procedures required to test existence, valuation, and completeness. You will review physical inventory counts, apply the lower of cost or market rule, and evaluate inventory cost layering methods, connecting technical background to practical audit execution.
Format
PDF Course
Course Lists
Duration
2.5 Hours
Course Information
Author: Steven Bragg
Course Number: AU1009
Table of Contents
Chapter 1. Auditing Inventory
Chapter 2. The Physical Inventory Count
Chapter 3. The Lower of Cost or Market Rule
Chapter 4. Inventory Cost Layering
Learning Objectives
- Recall the classifications used for inventory.
- Specify the characteristics of the different types of inventory fraud.
- Describe the situations in which inventory errors can lead to material misstatements.
- Describe the substantive procedures used by an auditor to audit inventory.
- Recognize the items to be reviewed as part of an inventory test count.
- Specify the actions to be taken when testing inventory costs.
- Describe compilation testing.
- Identify the additional inventory audit steps used when a new client was not audited in the past year.
- Cite the circumstances under which a physical inventory count can be avoided.
- Recall the issues associated with a client using a separate count team to verify the counts made.
- Recall the details of the lower of cost or market rule.
- Specify the advantages of the various inventory costing methods.
Level: Overview
Instructional Method: QAS Self-Study
NASBA Category: Auditing
Prerequisites: None
Advance Preparation: None
Latest Review Date: August 2024
Program Registration Requirements: Click on the Enroll button to pay for and access the course. You will then be able to download the course as a PDF file, then take an on-line examination, and then download a certificate of completion if you pass the examination.
Program Refund Policy: For more information regarding administrative policies concerning complaints, refunds, and other matters, see our policies page.
