CHAPTER

Audit of the Inventory and

21
Learning Objectives
Warehousing Cycle
After studying this chapter, you should be able to:
1. Describe the business functions and the related documents and records in the
inventory and warehousing cycle;
2. Explain the five parts of the audit of the inventory and warehousing cycle;
3. Design and perform audit tests of cost accounting;
4. Apply substantive analytical procedures to the accounts in the inventory and
warehousing cycle;
5. Design and perform physical observation audit tests for inventory;
6. Design and perform audit tests of pricing and compilation for inventory;
7. Integrate the various parts of the audit of the inventory and warehousing cycle.
 Four Phases of an Audit

Perform analytical
Plan and design procedures and
Phase I Phase III
an audit approach. tests of details
of balances.

Perform tests of
Complete the
controls and
Phase II Phase IV audit and issue
substantive tests
an audit report.
of transactions.

LO 1
 Financial Statements Cycles

General
cash

Capital acquisition
and repayment cycle

Sales and Acquisition Payroll and

collection and payment personnel
cycle cycle cycle

Inventory and
warehousing
cycle
 Learning Objective 1

Describe the business functions

and the related documents and
records in the inventory
and warehousing cycle.
 Learning Objective 1
Describe the business

Accounts in the Cycle functions and the related

documents and records in
the inventory and
warehousing cycle.

LO 1
 Learning Objective 2

Explain the five parts of

the audit of the inventory
and warehouse cycle.
 Learning Objective 2
Functions in the Inventory and Explain the five parts of the

Warehousing Cycle
audit of the inventory and
warehouse cycle.

LO 2
 Learning Objective 2
Explain the five parts of

Audit of Inventory the audit of the inventory

and warehouse cycle.

LO 2
 Learning Objective 3

Design and perform audit

tests of cost accounting.
 Learning Objective 3

Cost Accounting Controls Design and perform audit

tests of cost accounting.

1. Physical Controls

Raw materials WIP Finished goods

2. Controls over the related costs

LO 3
 Learning Objective 3

Test of Cost Accounting Design and perform audit

tests of cost accounting.

Physical Controls
Documents and records for
transferring inventory
Perpetual inventory master files
Unit cost records

LO 3
 Learning Objective 4

Apply analytical procedures to

the accounts in the inventory
and warehousing cycle.

Analytical Procedures for
Manufacturing Equipment
Learning Objective 4
Apply analytical procedures
to the accounts in the
inventory and warehousing
cycle.

Analytical Procedure Possible Misstatement

Compare gross margin Overstatement or
percentage with that of understatement of
previous years. inventory and cost
of goods sold
Compare inventory turnover Obsolete inventory
(cost of goods sold divided Overstatement or
by average inventory) with understatement of
that of previous years. inventory

LO 4
 Learning Objective 4

Analytical Procedures for Apply analytical procedures

to the accounts in the
inventory and warehousing
Manufacturing Equipment cycle.

Analytical Procedure Possible Misstatement

Compare unit costs of Overstatement or
inventory with those of understatement of
previous years. unit costs
Compare extended Misstatements in
inventory value with that compilation, unit
of previous years. costs, or extensions

LO 4
 Learning Objective 4

Analytical Procedures for Apply analytical procedures

to the accounts in the
inventory and warehousing
Manufacturing Equipment cycle.

Analytical Procedure Possible Misstatement

Compare current year Misstatement of unit
manufacturing costs with costs of inventory,
those of previous years especially direct
(variable costs should be labor and
adjusted for changes in manufacturing
volume). overhead

LO 4
 Learning Objective 5

Design and perform

physical observation
audit tests for inventory.
 Learning Objective 5
Design and perform
Standar (SA 501: Bukti Audit) physical observation
audit tests for inventory.

 Pertimbangan Spesifik atas Unsur Pilihan

berkaitan dengan pertimbangan spesifik oleh
auditor dalam memperoleh bukti audit yang
cukup dan tepat berkaitan dengan aspek
tertentu atas persediaan, litigasi dan klaim
yang melibatkan entitas, serta informasi
segmen dalam suatu audit atas laporan
keuangan.

LO 5
 Learning Objective 5
Design and perform
Standar (SA 501: Bukti Audit) physical observation
audit tests for inventory.

Jika persediaan berjumlah material dalam laporan keuangan,

auditor harus memperoleh bukti audit yang cukup dan tepat
tentang eksistensi dan kondisi persediaan dengan:
a. Menghadiri penghitungan fisik persediaan, kecuali jika
tidak praktis, untuk:
i. Mengevaluasi instruksi dan prosedur manajemen untuk mencatat dan
mengendalikan hasilpenghitungan persediaan fisik;
ii. Mengobservasi pelaksanaan prosedur penghitungan yang dibuat oleh
manajemen;
iii. Menginspeksi persediaan; dan
iv. Menguji penghitungan fisik (test count);
b. Melaksanakan prosedur audit atas catatan persediaan
final untuk menentukan apakah catatan tersebut
mencerminkan hasil penghitungan fisik aktual.

LO 5
 Learning Objective 5
Audit Responsibilities for Design and perform
physical observation
Client Physical Counts audit tests for inventory.

 Be present at the time the client counts

inventory
 Observe the client’s counting procedures
 Make inquiries of client personnel about
their counting procedures
 Make their own independent tests of the
physical count

LO 5
 Learning Objective 5
Design and perform
Controls physical observation
audit tests for inventory.

Proper instructions for the physical count

Supervision by responsible personnel
Independent interval verification of the counts
Independent reconciliations of the physical
counts with perpetual inventory master files
Adequate control over count sheets or tags

LO 5
 Learning Objective 5
Design and perform
Audit Decisions physical observation
audit tests for inventory.

Timing

Sample size
Selection
of items

LO 5
 Learning Objective 5
Design and perform
Physical Observation Tests physical observation
audit tests for inventory.

The most important part of the observation of

inventory is determining whether the physical
count is being taken in accordance with the
client’s instructions.

LO 5
 Learning Objective 5
Balance-Related Objectives: Design and perform
physical observation
Physical Observation Tests audit tests for inventory.

Inventory as
Existence recorded on tags exist.

Existing inventory is
Completeness counted and tagged.

Inventory is counted
Accuracy accurately.
LO 5
 Learning Objective 5
Balance-Related Objectives: Design and perform
physical observation
Physical Observation Tests audit tests for inventory.

Inventory is classified
Classification correctly on the tags.

Transactions are recorded

Cutoff in the proper period.

LO 5
 Learning Objective 5
Balance-Related Objectives: Design and perform
physical observation
Physical Observation Tests audit tests for inventory.

Obsolete and unusable

Realizable inventory items are
Value excluded or noted.

The client has rights

Rights to inventory recorded
on tags

LO 5
 Learning Objective 6

Design and perform audit

tests of pricing and
compilation for inventory.
 Learning Objective 6
Audit of Pricing and Design and perform audit
tests of pricing and
Compilation compilation for inventory.

Inventory price tests

Pricing and Pricing and

Valuation
compilation compilation
of inventory
procedures controls

Purchased Manufactured
inventory inventory

LO 6
 Learning Objective 6
Audit of Pricing and Design and perform audit
tests of pricing and
Compilation compilation for inventory.

 Inventory price tests

 Include all tests of the client’s unit prices to determine
whether they are correct
 Inventory compilation tests
 Include testing the client’s summarization of the
inventory counts, recalculating price time quantity,
footing the inventory summary, and tracing the totals to
the general ledger.

LO 6
 Learning Objective 6
Audit of Pricing and Design and perform audit
tests of pricing and
Compilation compilation for inventory.

 Standard cost records

 Independent person for reviewing the costs
 Formal review and reporting of obsolete, slow-
moving, damaged, and overstated inventory
items
 Physical counts

LO 6
 Learning Objective 6
Valuation (Pricing) of Design and perform audit
tests of pricing and
Inventory compilation for inventory.

Pricing Purchased Inventory

Pricing Manufactured Inventory

Cost or Market

LO 6
 Learning Objective 7

Integrate the various parts of

the audit of the inventory
and warehousing cycle.
 Learning Objective 7
Interrelationship of Various Integrate the various parts
of the audit of the inventory
Audit Tests and warehousing cycle

LO 7
 Learning Objective 7
Integrate the various parts
Integration of the Tests of the audit of the inventory
and warehousing cycle

 Acquisition and Payment Cycle

 Payroll and Personnel Cycle
 Sales and Collection Cycle
 Cost Accounting
 Physical Inventory, Pricing, and Compilation

LO 7
Pertanyaan?

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