Physical Inventory Observation Checklist

Name of Company : PT. Bakrie Pipes Industries Division of : Pipes Industries ocation or Department : !l. "aya Pe#uan$% Pondok &n$u 'edan (atria. Bekasi )*)+) Date,s- of Inventory Takin$ : !anuary )% ./)) Date,s- of Observation !anuary )% ./))

'a0ars "epresentative,s- : 1ko ( 'ulyadi% "eski Pu#iistiantoro% Devi 2n$$raeni% 3eni Ikhlas Budiman Company representative in char$e of inventory ,or department- : 'r. 2driyal 444444444444444444444444444444444444444444444444444444444444444444444444444444444444444444444444 The purposes of the physical inventory observation are to determine that ,)- the inventory physically e5ists% ,.- stated 6uantities fairly represent the actual 6uantities on hand at the date of the observation% and ,+- the inventory is in a usable and saleable condition ,e.$.% not dama$ed or obsolete-

Instructions
This checklist covers information obtained and audit techni6ues usually employed durin$ a physical inventory observation% includin$ tests of perpetual inventory records. The checklist is not an e5haustive list of considerations for all observations. It is supplemented by additional procedures 7henever appropriate. (ome 6uestions may be inappropriate for some observations. 8uestions that do not apply should be desi$nated N92 ,not applicable-. 2 :no; ans7er is e5plained in the mar$in or in an attachment referenced to the related 6uestion. 2 checklist is prepared by each '"I representative responsible for a location or department and is completed before leavin$ the inventory location. This checklist can be used in lieu of a physical inventory observation memorandum.

General Description of Inventory (indicate those that apply)

Types of Inventory: "a7 materials >inished $oods < < =IP Other <

(pecial Cate$ories of Inventory ,obtain particulars for audit follo7?up-: In?plant@ $oods billed not shipped $oods received not billed inventory held for others consi$nments in $oods at outside location $oods in transit to customers or from vendors consi$nments out 4444444 4444444 4444444 4444444 4444444 4444444 4444444 4444444

Off?plant@

(pecial Classes of Inventory: Obsolete 444444444 Overruns 44444444

15cess supply 4444444444 1n$ineerin$ models 44444444

Dama$ed4444444444 (pecial order4444444

3ive particulars for any classes listed above:

Inventory Instructions
Yes No
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Explanation
There is no inventory list

,)- =ere ade6uate 7ritten instructions prepared coverin$ each phase of the physical inventory proceduresA ,Describe deficiencies noted% if any.Obtain a copy of the instructions for the 7orkin$ papers and consider the follo7in$ in evaluatin$ their ade6uacy: ,a- Names of persons draftin$ and approvin$ instructions. ,b- Dates and times of inventory takin$. ,c- Names of persons responsible for supervisin$ inventory takin$. ,d- Plans for arran$in$ and se$re$atin$ inventory% includin$ precautions taken to clear 7ork?in?process to cutoff points. ,e- Provisions for control of receivin$ and shippin$ durin$ inventory takin$ period and% if plant is not shut do7n% provisions for handlin$ inventory movements. ,f- Instructions for recordin$ description of items and ho7 6uantities are to be determined ,e.$.% count% 7ei$ht% or other measurement-. ,$- Instructions for identifyin$ obsolete% dama$ed% and slo7?movin$ items. ,h- Instructions for use of inventory ta$s or count sheets ,includin$ their distribution% collection% and control-. ,i- Plans for determinin$ 6uantities at outside locations. ,#- Instructions for revie7 and approval of inventory by department heads or other supervisory personnel. ,k- 'ethod for transcribin$ ori$inal counts to final inventory sheets or summaries. ,.- Did the CompanyBs personnel follo7 the inventory < <

instructionsA ,+- =ere inventory items arran$ed in an orderly manner prior to the inventory to facilitate the countin$A

Yes
,C- =ere types% special cate$ories% and special classes of < inventory properly se$re$ated to facilitate proper inclusion9e5clusion from the physical countA ,D- =ere inventory cre7s ade6uately supervisedA

No

Explanation
Not 2vailable

Company Counting Procedures

,E- =ere inventory cre7s assi$ned to count material for 7hich they normally are responsibleA

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They 7ill search that item and check 7ith inventory division 7hich caused differences. They 7ill use physical count actual in the field.

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The movement 7ill be indicated on the ta$s.

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If not% 7ere the cre7s familiar 7ith the inventoryA ,*- Did the counters proceed in a systematic and orderly mannerA ,F- =ere inventory cre7s denied reference to perpetual records durin$ the countin$A =ill someone subse6uently compare counts to the perpetual records and investi$ate differencesA ,G- =ere counts checked or inventory items recounted by persons other than those makin$ ori$inal countsA =ere they denied reference to the ori$inal countsA ,)/- =ere all 6uantities determined by actual physical

countA ,If not% describe method used for estimatin$ 6uantities.,))- If 7ork?in?process inventory is si$nificant% indicate ho7 the percenta$e of completion 7as determined and ho7 labor and overhead 7ill be applied. ,).- If part of the inventory 7as precounted% 7ere subse6uent receipts and 7ithdra7als indicated on the ta$s% or effectively controlled by other proceduresA ,)+- =ere prenumbered inventory ta$s used and accounted forA ,If ta$s 7ere not used% describe method used% includin$ the procedures used to assure that all inventory items 7ere counted.,)C- 2re the counts% as recorded% the final 6uantities that are to be used in the inventory listin$sA ,If not% e5plain the nature of anticipated chan$es for subse6uent shipments% receipts% etc.-

Cutoff Procedures
,)D- Did client procedures include accumulation of cut?off informationA

Yes
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No

Explanation

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Not 2vailable

,)E- =as production suspended durin$ inventory takin$A ,If not% describe the procedures used to control the movement of materials.,)*- =ere shippin$ and receivin$ operations suspended durin$ the inventory takin$A ,If not% describe procedures employed to assure an accurate cut?off.,)F- =ere the items in the shippin$ and receivin$ areas,sproperly se$re$ated bet7een items to be inventoried and those not to be inventoriedA ,)G- If the Company has more than one inventory location% describe the procedures to account for interplant receivin$ and shippin$ durin$ the inventory period.

!solescence and "afeguarding

,./- Briefly describe the CompanyBs procedure for
There is no slo7 movin$ item because the inventory procedure based on orderly manner. Not 2vailable

Identifyin$ obsolete and slo7?movin$ items. ,.)- Briefly describe deficiencies noted ,if any- in the CompanyBs physical safe$uards over inventory items.

#est Count Procedures

,..- =ere countin$ and recordin$ procedures actually

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observedA ,.+- =ere independent test counts made and listed in the 7orkin$ papers ,e.$.% usin$ test count form-A ,.C- =ere test counts made other than those listedA Note: The primary purpose for makin$ test counts is to verify the accuracy of client 6uantities and descriptionsH the primary purposes of recordin$ test counts are to control 6uantities used in pricin$ the physical inventory and to document e5ceptions. Thus it is not necessary to record all test counts made. ,.D- =ere errors located as a result of such tests correctedA If numerous errors 7ere noted% did the CompanyBs personnel recount the area,s- involvedA Did 7e subse6uently revie7 the area,s- recounted for final clearanceA

Yes
,.E- =ere tests made to assure proper recordin$ of inventory description% sta$e of completion% and unit of measureA <

No

Explanation

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=e count based on test from the floor and then check 7ith count sheets. Not 2vailable

Not 2vailable

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Not 2vailable

,.*- =as a revie7 made to ascertain that all items had been ta$$ed or other7ise accounted forA ,Briefly describe our procedures if the Company did not use ta$s.,.F- If inventory count sheets 7ere used% have 7e selected some of our test counts from the floor and some from the count sheetsA ,.G- If si0able 6uantities of sealed packa$ed materials 7ere on hand% 7ere they vendor packa$edA If the Company packa$ed% did 7e test some packa$es ,at least for the more valuable items-A ,+/- If all or part of our observation represents a test of the CompanyBs perpetual records% briefly describe the procedures and controls that assure the reliability of these records and complete the follo7in$: ,a- Iave 7e selected some of our test counts from the floor and some from the perpetual recordsA ,b- =ere all of our test counts reconciled to the perpetual recordsA If not% is there sufficient information in our 7orkin$ papers to enable this to be done at a later dateA ,c- Iave 7e revie7ed the perpetual records and investi$ated lar$e 6uantity ad#ustmentsA ,d- Ias the cut?off information listed herein been traced to proper recordin$ in the perpetual recordsA ,+)- Ias our observation covered all inventory for 7hich this location is responsibleA ,If not% comment on items held at outside locations and estimated amounts thereof% includin$ consi$nments.,+.- Describe our procedures to assure that inventory items 2re not added subse6uent to our observation procedures ,e.$.% obtain a list of the inventory ta$ numbers used% obtain a copy of the inventory count sheets% or list the number of line items on each count sheet-.

Yes
,++- Iave 7e discussed obsolescence% slo7?movin$% and <

No

Explanation
There is no slo7 movin$ item because the movement if inventory based on orderly manner.

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unsaleable items 7ith the CompanyBs production employeesA ,+C- Iave 7e listed all si$nificant items of obsolete or slo7movin$ inventory noted durin$ our observation ,includin$ name,s- or employee,s- 7ith 7hom the items 7ere discussed-A

Compilation Information
,+D- If 6uantities counted 7ill be converted to a different unit of measure on the final inventory listin$% have 7e obtained sufficient information to test the conversionA <

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,+E- =ill details of Company count combinations be available 7hen our test counts are traced to the final inventory listin$A ,If not% describe ho7 7e can reconcile our counts to the final listin$.-

ther
,+*- Indicate 7ays in 7hich future physical inventories mi$ht be improved 7ith re$ard to Company procedures.

,+F- Indicate ho7 '"I procedures re$ardin$ future physical inventories mi$ht be made more efficient.

Comments$
>or roll back procedure of the inventory canBt be done because 7e use samplin$ method and the item 7e are $oin$ sample is in separate location. If 7e 7ant to do roll back procedure% 7e should check all the inventory in all location.

Conclusion
Based on the results of my tests and observations% it is my opinion that the CompanyBs inventory documentation fairly represents the actual 6uantities on hand% e5cept as noted belo7. >urther% based on my observations and in6uiries% it is my opinion that the inventory is usable and saleable% e5cept as noted belo7. 15ceptions: