This auditing CPE course clarifies for the auditor every action needed to audit inventory. It describes the characteristics of inventory from an auditing perspective, and then goes on to describe the steps required to audit inventory. Background information concerning inventory is also included, such as physical inventory counts, the lower of cost or market rule, and inventory cost layering.
Learning Objectives
Upon successful completion of this course, participants will be able to:
Recall the classifications used for inventory.
Specify the characteristics of the different types of inventory fraud.
Describe the situations in which inventory errors can lead to material misstatements.
Describe the substantive procedures used by an auditor to audit inventory.
Recognize the items to be reviewed as part of an inventory test count.
Specify the actions to be taken when testing inventory costs.
Describe compilation testing.
Identify the additional inventory audit steps used when a new client was not audited in the past year.
Cite the circumstances under which a physical inventory count can be avoided.
Recall the issues associated with a client using a separate count team to verify the counts made.
Recall the details of the lower of cost or market rule.
Specify the advantages of the various inventory costing methods.
Major Topics
Auditing Inventory
Inventory Fraud
Accidental Errors
Conduct Analytical Procedures
Mixed Systems
The Physical Inventory Count
Lower of Cost or Market Rule
Inventory Cost Layering
