CHAPTER 19 INVENTORY AND WAREHOUSING CYCLE FUNCTIONS IN
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CHAPTER 19 INVENTORY AND WAREHOUSING CYCLE
FUNCTIONS IN CYCLE • • PROCESS PURCHASE ORDERS RECEIVE NEW MATERIALS STORE RAW MATERIALS PROCESS GOODS – ADEQUATE COST ACCOUNTING SYSTEM • STORE FINISHED GOODS • SHIP FINISHED GOODS • PERPETUAL INVENTORY RECORDS
PARTS OF THE AUDIT OF INVENTORIES • ACQUIRE, RECORD RAW MATERIALS, LABOR, AND OVERHEAD – PURCHASING CYCLE – PAYROLL CYCLE • TRANSFER INVENTORY AND COSTS • SHIP GOODS AND RECORD – SALES AND COLLECTION CYCLE • PHYSICALLY OBSERVE INVENTORIES • PRICE AND COMPILE INVENTORY
AUDIT OF INVENTORIES • AUDIT OF COST ACCOUNTING – COST ACCOUNTING CONTROLS • PHYSICAL CONTROLS OVER INVENTORY • CONTROLS OVER COSTS – PERPETUAL INVENTORY RECORDS – TESTS OF COST ACCOUNTING • PHYSICAL CONTROLS – OBSERVATION AND INQUIRY • DOCUMENTS AND RECORDS FOR TRANSFERS • PERPETUAL INVENTORY FILES • UNIT COST RECORDS
• ANALYTICAL PROCEDURES – IMPORTANT TO AUDIT OF INVENTORY • TESTS OF DETAILS OF BALANCES – METHODOLOGY ON PAGE 650 • PHYSICAL OBSERVATION – REQUIRED BY SAS 1 UNLESS… – CLIENT CONTROLS FOR OBSERVATION • INSTRUCTIONS • PERSONNEL • TAGS – AUDIT DECISIONS • TIMING • SAMPLE SIZE • SELECTION OF ITEMS – PHYSICAL OBSERVATION TESTS BY AUDITOR
• AUDIT PRICING AND COMPILATION – PRICING AND COMPILATION CONTROLS • STANDARD COST RECORDS • ADEQUATE DOCUMENTS FOR COUNT • INTERNAL VERIFICATION – PRICING AND COMPILATION PROCEDURES • BALANCE RELATED OBJECTIVES – – – – INVENTORY AGREES WITH PHYSICAL COUNTS INVENTORY EXISTS COMPLETENESS ACCURACY CLASSIFICATION RIGHTS PRESENTATION AND DISCLOSURE • VALUATION OF INVENTORY
• INTEGRATION OF TESTS – ACQUISITION AND PAYMENT CYCLE – PAYROLL AND PERSONNEL CYCLE – SALES AND COLLECTION CYCLE – COST ACCOUNTING – PHYSICAL INVENTORY • OBSERVATION • PRICING • COMPILATION
