Berhampur CALL GIRL❤7091819311❤CALL GIRLS IN ESCORT SERVICE WE ARE PROVIDING
Task 5 inventory audit programme_v2
1. 1
AUDIT PROGRAMME
INVENTORY
Name of Client Sheridan AV
Year-end March 31, 2021
Name of Auditor (s) Jewel AD G. Baje
INVENTORY
Inventory is shown as a current asset on the Statement of Financial Position. It is valued at
the lower of cost or net realisable value. Inventory can be shown as goods bought for resale
(merchandising company) or in one of three stages for a manufacturing company:
Raw materials
Work in process
Finished goods
Substantive testing should be carried out at year end on the Statement of Financial Position to
gain evidence regarding the following assertions:
Presentation and disclosure
Accuracy classification and valuation
Rights and Obligations
Completeness and cut off
Existence or Occurrence
The following substantive tests were carried out on the inventory showing on the Statement
of Financial Position (see attached)
2. 2
Audit
Assertion
Audit
objective
Test(s) to be
carried out
Details of testing Date and
signature
Presentation
and
Disclosure
Inventory is
properly
identified and
classified in
the financial
statements
Disclosures
pertaining to
the
classification,
basis of
valuation and
the pledging
of inventories
are adequate
Trace opening
inventory records
to prior year’s
working papers
Perform analytical
review and review
industry experience
and trends.
Examine an
analysis of
inventory turnover
and gross profit
Compare report
presentation with
applicable
accounting
standards
Review disclosures
for inventories in
drafts of financial
statements and
determine
conformity with
applicable
Note: Inventory records
can be traced to prior
year’s working papers
Inventory Turnover 2021
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠
5,338,039
388,612
= 13.74%
Inventory Turnover 2020
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐺𝑜𝑜𝑑𝑠 𝑆𝑜𝑙𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑖𝑒𝑠
3,596,251
195,426
= 18.40%
Note: Higher
inventory turnover ratios
are considered a positive
indicator but does not
always mean
better performance. It
sometimes may indicate
inadequate inventory
level, which may result
in decrease in sales.
Current gross profit of
Sheridan AV indicates
good performance as it is
higher compared to the
prior period.
Note: Items were
properly presented and in
accordance with the
accounting standards.
Note: Based on the
disclosure note,
inventories were properly
disclosed. Personnel
assigned to inventories
know the proper
executions in doing their
job efficiently and
3. 3
accounting
standards.
effectively. Inventory
management is
commendable.
Accuracy,
classification
and
valuation
Rights and
Obligations
Inventories
are properly
stated at the
lower of cost
or net
realisable
value,
determined in
accordance
with
applicable
accounting
standards
Actual – agree
prices to purchase
invoices on costing
records
Selling price less
mark up – (a) agree
a selection of items
to current price
lists and also prices
noted at the
inventory
attendance and (b)
consider whether
the gross margin
used to reduce
selling price to cost
is reasonable and
has been correctly
applied
Perform a lower of
cost or net
realisable value test
(see supplementary
sheet)
Note:
(a) Selling prices of each
item weren’t presented at
the inventory attendance.
(b) Gross Margin
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐶𝑂𝐺𝑆
𝑅𝑒𝑣𝑒𝑛𝑢𝑒
7,213,567 − 5,338,039
7,213,567
= 0.26
Business with 20%
margin is considered
high which means,
Sheridan AV is doing
good. The result shows a
reasonable gross profit.
Note: Selling prices of
each item weren’t
indicated. It should be
presented in order to
properly evaluate the
company’s pricing
strategy. The owner of
Sheridan AV decided to
sell the slightly damaged
HR-03 Highrise speakers
– 12 pairs at 50% off,
£500. There’s no
problem seen as the
inventory is stated at cost
and the increase in value
is not recognized.
Completenes
s and Cut off
Inventories
include all
materials,
products and
supplies at
the Statement
of Financial
Position date
CUT OFF
Review the results
of the test on cut-
off carried out on
receivables and
payables and
ensure that they
provide adequate
assurance as to the
Note:
4. 4
accuracy of the
year end cut-off
Enquire if any
inventory is held
on behalf of third
parties and ensure
that such items are
excluded from
inventory. Where
material, obtain
confirmation from
the third party.
Where inventory is
held by third
parties on behalf of
the company,
obtain certificates
where amounts are
material.
Note: The warehouse and
distribution manager
stated that they don’t
hold any third-party
stock.
Existence or
Occurrence
Inventories
included in
the Statement
of Financial
Position
physically
exist
Complete the
inventory
attendance
programme (see
supplementary
sheet)
Trace all items
selected at the
inventory count to
the final inventory
sheets. Obtain
explanations for
any differences
Note: The inventory
count provided by the
warehouse and
distribution manager
have differences, in
terms of quantity, against
the final inventory sheet.
The inventory that has
been delivered to
customers but not yet
been paid for in full were
included on the final
inventory sheet.
From the audit work carried out I confirm that (*subject to the matters highlighted below) in
my opinion, inventories are fairly stated.
Signed
JEWEL AD G. BAJE
Auditor
5. 5
SUPPLEMENTARY SHEET
LOWER OR COST OR NET REALISABLE VALUE TEST
For items priced at net realisable value, the auditors must verify the basis for arriving at that
value (it should be actual selling price less an estimate of costs to be incurred in completion
and selling)
IAS 2 identifies the following situations when a write-down may be necessary: a fall in
selling prices; physical deterioration of inventories; obsolescence; a decision to sell at a loss
or purchasing or production errors.
TESTS THAT CAN BE CARRIED OUT
1. Review sales after date of Statement of Financial Position
2. Observe for signs of obsolescence during attendance at inventory count
3. Analyse amount of inventory held in relation to budgeted turnover to identify any
excessive holdings.
4. Enquire of management and of sales and production personnel
5. Review minutes of boards of directors and executive committees
6. 6
Client ____SHERIDAN AV_____________________________________________
Year End ____MARCH 31, 2021____________________________________________
AUDIT PROGRAMME – INVENTORY COUNT ATTENDANCE
NOTES INITIALS AND
DATE
GENERAL
1 Record the following details for
each location visited:
(a)location(s) being counted
(b)date(s) of count and attendance
(c) types of inventory held at
location
(d) approximate value of inventory
by category and location
(a) The locations being counted
were Warehouse, Store room,
Demo room, Shop.
(b) The date of count was on
March 31, 2021 and Peter
Fillion, Rob Cole, Dan
Sheppard were responsible
for the counting
(c) Warehouse; (zone 1 –
speaker systems, zone 2 –
TVs and projectors, zone 3 –
BluRay players, amplifiers,
zone 4 – Finished cabinets
plus headphones, cable kits
etc., zone 5 – wood for
cabinet construction, zone 6 –
cabinet fixings, brackets etc.,
zone 7 – smaller speaker
components, damage stock),
Store room – smaller
quantities of items for
manufacturing process, small
components, screws, etc.
Shop – finished products
(d) Warehouse;
Zone 1 (speaker systems) –
qty. 507, approximate value
of £79,592
Zone 2 (TVs and projectors)
– qty. 590, approx.
v.£175,672
Zone 5 (wood for cabinet
construction) – qty. 1,268,
approx. v. ££47,479
Zone 6 (cabinet fixings,
brackets etc) – qty. 580,
approx.. v. £18,830
7. 7
(e) Details of any inventory at
locations not covered by the
count and any alternative
method used to verify their
existence
(f) brief description of the
procedures adopted
Store room (smaller
quantities of items for
manufacturing process, small
components, screws, etc.) –
qty. 9,327, approx.. v.
£19,755.20
Shop (Goods for sale) – qty.
14, approx. v. £3,712
Demo room – qty. 6, approx.
v. £5,480
(e) The office junior printed a
list of any inventory that has
been delivered to customers
but not yet paid in full and
Peter add the items on to the
inventory quantities. She also
performs full reconciliation
with the inventory records
(f) The warehouse was split into
various zones for better
categorizing of inventories.
The production and deliveries
had stopped the before and
on the day of counting. The
W&D Manager had a
briefing together with the
staffs on how to count the
inventories. The warehouse
assistant will fill blank fields
at the top of the form and
write down the quantities of
each items. He will also
adhere sticker to the items to
prevent double counting and
note of any damaged or
slowing moving stock. As for
the warehouse, they will do
the same but they will do
their assigned work on the
sheets that are blank. The
W&D Manager will then do
some test counting to
checked if the items were
entered correctly. Inventories
that have been sold but not
fully paid yet will also be
8. 8
(g) names of client staff counting
(h) names of audit staff taking part
added to the inventory
quantities. The office junior
will then perform a full
reconciliation of items with
the inventory records.
(g) Peter Fillion, Rob Cole, Dan
Sheppard
(h) Jewel AD G. Baje
2 Ascertain and note whether:
(a) the inventory count teams were
properly briefed prior to
commencing the count;
(b) the teams only include people
who are not responsible for the
storing and recording of
inventory and work in progress;
(c) inventory was counted by teams
of two (one counting and one
checking and recording);
(d) the teams were asked to identify
damaged, slow moving or
obsolete stock;
(e) the teams were made aware of
inventory held on behalf of third
parties and these were excluded
from the count
(a) The w&b manager were able
to relay things to be done
such as adhering stickers to
each item they count and
make note on the sheets of
any stock which is old, slow
moving or damaged.
(b) Teams included are the W&D
Manager and its Warehouse and
Retail Shop assistants
(c) The inventory was checked
by the W&D manager after the
assistants counted the items.
(d) The team had a briefing and
were asked to identify damaged,
slow moving or obsolete stock.
(e) The W&D Manager stated
that they don’t hold any third-
party stock
INVENTORY COUNTING
3 Determine whether:
(a) the teams were counting and
recording accurately
(b) the counts were being controlled
to ensure that all inventory was
counted and only once;
(c) there was adequate control over
inventory sheets to ensure that
they are all accounted for (e.g.
pre-numbered)
(a) Recordings were match as
per checking the provided
inventory count sheet
(b) The stickers being adhered
prevented double counting of
items
(c) Pre-printed sheets with stock
number and item description
were used throughout the
counting of inventory in the
warehouse while the shop
9. 9
4 Where serially numbered sheets
are used, record the numbers of all
sheets used at the end of the count
and demo room will have the
remaining sheets which are
blank.
4 Serially numbers sheets were
used and were put together and
pass all the sheets to the office
junior for processing.
5 Select a sample of items from
completed inventory sheets and
check to ensure that the number has
been recorded properly
5 Random sample was conducted
and items were doubled checked
on the count sheet against the
items on the warehouse shelf and
reverse checking of items was
also done
6 Count a sample of inventory
items and ensure that they have
been recorded properly on the final
inventory sheets
6 The W&D Manager carried out
some testing on the sample of
items that his assistant already
counted. He checked the items on
the sheet against the items on the
shelf
7 Where possible, copy or extract
details of a sample of rough
inventory sheets for checking at the
final audit
7 Inventory sheets were provided
(raw materials, finished goods,
and inventory totals)
8 Ascertain whether any inventory
is held on behalf of a third party.
Where applicable ensure that it has
been properly labelled and
excluded from the count
8 The W&D Manager stated that
they don’t hold any third-party
stock
9 Note any old or damaged
inventory during the count. Ensure
that it is marked as such on the final
inventory sheets.
9 The assigned workers were
tasked to do some checking and
note but stocks weren’t old nor
slow-moving
CUT OFF
10 Ensure that no movements in or
out took place during the inventory
count
11 Record details of the last goods
dispatch number and the last goods
received note number to follow up
at the final audit.
10 The assigned team closed the
doors to the warehouse and make
certain that there will be no
deliveries in or out
11 There were no record details
of the last goods dispatch number
and the last goods received note
number to follow up at the final
audit.
CONCLUSION
12 Write a report on the inventory
count concluding on its accuracy
and the ability to be able to rely on
it.
12 The inventory count went
smoothly and there were no
problems encountered from the
sample test counts. The
employees also know their job
well and were able to answer all
the questions being asked.