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CHAPTER 19

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.

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CHAPTER 19

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  1. CHAPTER 19 INVENTORY AND WAREHOUSING CYCLE

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. INTEGRATION OF TESTS • ACQUISITION AND PAYMENT CYCLE • PAYROLL AND PERSONNEL CYCLE • SALES AND COLLECTION CYCLE • COST ACCOUNTING • PHYSICAL INVENTORY • OBSERVATION • PRICING • COMPILATION

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