Existence - detailed audit of stock, Auditing

Existence - Detailed Audit of Stock

In the previous the auditor accepted a director's certificate as to the existence of stocks.  Until some cases specifically in the United States of America were decided against auditors for their failure to contain adequate independent evidence such the stocks related were in existence.  On some occasions, auditors certified accounts as providing a fair and true view if the stocks concerned were non-existent. The unfavorable decisions against the auditor have effected in the profession making it obligatory such where the stocks are an important figure in the accounts the auditor should proof existence.

This is realized chiefly by the client managing for a stock take and the auditor attending to examine the stock take.

Whether is not the auditor's duty to take stock?  However he must satisfy himself as to the validity of the amount attributed to stocks in the accounts which are the subject of his audit.  In ascertaining the extent and nature of the audit steps essential for this reason the auditors must scan the system of internal control in order to assess its effectiveness concern to the evaluation and ascertainment of work and stocks in progress.  Whenever it will not commonly be essential for the auditor to observe the whole stock take or visit all place their tests should warp a representative section of the stock.  Where stocks are held at a number of places the selection of the places to be visited would be planned as to cover all important locations over a time of years.

The amount at that stock is stated in the accounts should be based upon a physical stock taking at the year finish or upon information contained from stock records.  If stock is based on records these must be substantiated through periodical or continuous physical stock takings.  The processing should ensure:

a) Sufficient stock records are remained up to date.

b) Each category of stock is checked at least once a year and a record of verify maintained.

c) Whether the checking is continuous, it is done systematically over the years or whether periodic at appropriate times, which as when stocks are low or have reached a particular reorder point.

d) All differences are generally investigated and the records amended therefore. There have to be kept schedules of differences along with details of the action such was taken.

Posted Date: 1/25/2013 3:09:49 AM | Location : United States







Related Discussions:- Existence - detailed audit of stock, Assignment Help, Ask Question on Existence - detailed audit of stock, Get Answer, Expert's Help, Existence - detailed audit of stock Discussions

Write discussion on Existence - detailed audit of stock
Your posts are moderated
Related Questions
Action if Management Refuses to provide Representations Whether management rejects to provide a representation which the auditor considers compulsory, this constitutes a scope

challenges facing sasini company"s audited statements

what is the role of a joint auditor

Problem 10.42 An investment of $83 generates after-tax cash flows of $49 in Year 1, $67 in Year 2, and $131 in Year 3. The required rate of return is 20 percent. The net presen

Fitri, a sole proprietor in pulic practice, plans to establish a separate department that will provide internal audit service to his audit clients.

With reference to the case study business, identify appropriate audit tests to be carried out. Prepare a statement of the work to be carried out and the manner in which it will be

What techniques used during an audit? Ans)  ? Be professional at all times. Avoid being judgmental. ? Follow safety procedures, clean room procedures, and all other needed pr

Role of Accountant The Accountant's Role Every year a lawyer who such handles client's money is used to created to the Law Society of US a report through a qualified accoun

Financial Statements Rely All Financial providers people must be sure that the financial statements can be relied upon. It should be noted that: 1. The auditor himself must be