Discussion Topic: Planning an Inventory Audit You will analyze a company\'s curr
ID: 2339238 • Letter: D
Question
Discussion Topic: Planning an Inventory Audit You will analyze a company's current inventory setup and determine the course of action to take to audit the client's inventory. In order to successfully audit inventory, a thorough plan must be devised to ensure all facets are accounted for The Crafty Craft Corner has been asked by its bank to perform an audit, which it has never done before. Part of this audit is to perform a year-end physical inventory. The store uses a periodic inventory system, as management does not feel it's necessary to track every bead and button sold As the auditor hired to perform the inventory audit, what are your recommendations to the store management to prepare for the audit? Would you suggest they implement a perpetual inventory system? What documentation would you request the managers create regarding their inventory? What other steps would you recommend to ensure a smooth process?Explanation / Answer
The suggestions to the store administration to plan for the review by the examiner employed are :
I. The Inventory according to the occasional stock report must exist.
ii. The report of occasional stock framework must incorporate every one of the inventories.
iii. Keep set up the best possible records of the stock properly approved by the assigned individual.
Interminable Inventory framework depicts arrangement of exchanging stocks where data on stock amount and accessibility is refreshed consistently as an element of working together. The never-ending framework is prescribed on the grounds that :
I. The period framework depends upon an incidental physical check of the stock, while the never-ending framework monitors stock adjusts.
ii. It is about difficult to track through the bookkeeping records under an occasional bookkeeping framework to decide the reason of stock related mistake, while on the unending framework blunders are recognized and redressed as and when they happen.
Documentation asked for by the administration in regards to the stock are :
I. Enroll of Inventory.
ii. Subtle elements of receipt and issue of the stock.
iii. Report of the Physical check.
iv. Letter from the Management guaranteeing the periodicity of the Physical Verification.
Different advances prescribed to guarantee a smooth procedure are:
I. Recognize the Inventory Location,
ii.review customer methods,
iii.tour the business,
iv.forbid the development of stock amid physical confirmation.
v. Perform never-ending stock framework.
vi. Inner Control must be equivalent with the span of the business.