The document discusses auditing procedures for inventory warehousing transactions. It outlines controls that should be in place over receipt and issuance of goods, including ensuring all transactions are recorded accurately. The audit program tests these controls and examines transactions to verify existence, completeness, ownership, proper valuation and recording according to standards. Audit procedures include checking receiving reports, accounting for documents, invoices and allocation of costs, as well as inventory counts to test quantities and price verification.

1. D. AUDIT OF INVENTORY WAREHOUSING
The transactions included in the warehousing activities are:
1. the receipt of goods by the storeroom, and
2. the issuance of goods.
I. Test of Controls: INVENTORY WAREHOUSING
Auditors perform one or more audit procedures to test the following assertions related to
inventory warehousing:
1. Existence or Occurrence- Recorded inventory warehousing transactions occurred.
2. Completeness- All inventory warehousing transactions that occurred are recorded.
3. Rights & Obligations- Inventory warehousing transactions are for goods that belong to the entity.
4. Valuation or Allocation- Inventory warehousing transactions are recorded for the proper amounts.
5. Presentation and Disclosure- Inventory warehousing transactions are recorded to result in
presentation and disclosure in accordance with PAS/PFRS.
II. AUDIT PROGRAM FOR TESTS OF CONTROLS OVER INVENTORY WAREHOUSING
TRANSACTIONS
Absence of or inadequate controls over inventory warehousing transactions could result into the
following misstatements and/or irregularities.
1. Fictitious receipts/issues may be recorded.
2. Goods may be received or issued but not recorded.
3. Errors may be recorded in the quantity of goods transferred.
4. Inventory may be misvalued.
5. Goods on consignment may be treated as inventory.
6. Receipt or issue may be charged or credited to wrong accounts.

2. III. SUBSTANTIVE TESTS OF INVENTORY WAREHOUSING TRANSACTIONS
Assertions Audit Objective Audit Procedures
I. Existence or
Occurrence
A. To determine that
recorded inventory
warehousing transactions
occurred.
1. For selected
transactions recorded in
the inventory control
account, examine signed
receiving report.
II. Completeness B. To determine that all
inventory warehousing
transactions that occurred
are recorded.
2. Account for a sequence
of receiving reports and
requisitions. Perform
records-to-floor and floor-
to-records tests.
III. Rights & Obligations C. To determine that
inventory warehousing
transactions are for goods
that belongs to the entity.
3. Examine invoice for
goods received.
IV. Valuation or
Allocation
D. To determine that
inventory warehousing
transactions are recorded
4. Trace allocated costs
back to supporting
documents. Verify

3. for the proper amounts. mathematical accuracy and
trace postings.
V. Presentation and
Disclosure
E. To determine that
inventory warehousing
transactions are recorded
to result in presentation
and disclosure in
accordance with PAS/PFRS.
5. Check accuracy of
accounts on invoices by
referring to chart of
accounts.
Discussion of Audit Procedures
The audit procedures described in the preceding schedule are designed primarily to test
the quantities of goods recorded and the prices assigned to goods in the perpetual
inventory records.
 Testing Quantities
The auditor may select items from the inventory records, goes to the warehouse and
counts the goods on hand, and determine the accuracy of the inventory records.
 Testing Prices
To test the accuracy of prices, an auditor may trade amounts to vendor’s invoices, prior
year’s schedules listing the inventory value, a standard cost sheet, or a cost of production
report.