Disclosures about inventories - ias 2, Auditing

Disclosures about Inventories - IAS 2

IAS 2 specifies disclosures about inventories.

In a large manufacturing company, no article in the balance sheet appears verification problems to auditors for the extent such stocks do. The causes for this simply are:

a) The amounts included are material;

b) Stock has a one for one impact on the reported advantages.  In other words an increase of stock by one shilling increases the reported advantages through one shilling. Therefore it opens itself simply to distortion through the management;

c) Stock does not derive from the general double entry system, it is mostly a figure arrived at through a stock taking exercise held at the end of the year, priced and incorporated in the loss and profit account and balance sheet, any variations to be written off to price of sales.

d) Stocks are portable and valuable opening themselves to pilferage and deterioration either intentional or accidental.

e) The number of items involved is usually numerous creating verification problems as far as existence and condition is concerned.

f) Although stocks are valued at the lower of cost and net realizable value, what constitutes cost can vary from one management to another and the basis of determining that cost can be subject to so many different methods all resulting in different values for the same items.

g) It is an area that is susceptible to manipulation by management as apart from problems of arriving at cost, the provision for damaged, slow moving and obsolescence stocks is a question of judgment hence it is simple for the management and the auditor or disagrees.

h) Stock is merely not one item but many different items, an example; finished goods, spares, goods in transit, work in progress, raw materials, consumables etc.  Each this can be priced on a different basis and described and amalgamated as stocks.

Posted Date: 1/25/2013 2:57:40 AM | Location : United States







Related Discussions:- Disclosures about inventories - ias 2, Assignment Help, Ask Question on Disclosures about inventories - ias 2, Get Answer, Expert's Help, Disclosures about inventories - ias 2 Discussions

Write discussion on Disclosures about inventories - ias 2
Your posts are moderated
Related Questions
Hi Dear, Could you please help me with online exam in Auditing Class !!

ILLEGAL ACTS Auditors may uncover criminal offences committed by a client or an employee of the client. This puts them in a difficult place, though the auditor must act careful

Explain The Difference Between Internal Audit And External Audit?        Ans) The internal audit is performed to help the management. The weakness of the management is disclosed

Procedures followed in Conducting an Audit Procedures generally followed in conducting an audit by more than one firm of accountants and the division of work between them.

How to involve people in audit? Ans) Use audits as opportunities to train others. Ask for a volunteer (who is not an auditor) to walk by the audit process with you as an assista

Required: Describe a complete audit program for collecting relevant evidence for the audit of the estimated warranty liability. Approach: Develop specific assertions related to

auditor is a watch dog not a blood hound

Forms of Evidence Observation , is mostly witnessing internal book-keeping procedures and system control. It involves attendance at wages pay out. Observation of stock-ta

Factors Affecting Statistical Technique Factors to be taken into concern before adopting statistical techniques as: a) The number of clients to whom it is appropriate since

Ask You are the senior auditor assigned to the team performing an audit for Restorative Pharmaceutical Corporation (RPC), a 10-year-old publicly held corporation listed on the New