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AUDIT PROGRAM FOR INVENTORY

Sr DescrIptIons Reference Date


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Third) Audit Program for Inventory

A Audit Program to check the existence:


You are going to perform an inventory physical count
in company warehouse to ensure proper inventory record
through the following procedures:

1 In favor to test the existence and recording, your sample


will be selected by two ways:
a Take samples from the inventory record and ensure all
inventory items appearing in the books are physically
present in the warehouse, the sample selected should be
recorded in separate sheet, before the physical count with
item codes, description and recorded quantity.
b Take samples from the floor at the time of physical count
and ensure they are recorded in books in accurate way

2 Obtain last Goods Received Voucher (GRV) and Goods


Delivery Note for checking purposes to see if there is any
difference between the books and physical in the
reconciliation.

3 During the visit for surprise physical count in warehouse


following points should be considered:
3-1 Inventory is kept in secured area and is safe from all
extreme climatic conditions
3-2 Access to inventory is restricted by having one exit and
is controllable by Warehouse Manager
3-3 Inventory located in the warehouse is easily accessible
and reachable and should be properly stacked
3-4 Ensure that safety equipment, i.e. fire alarms, sensor and
fire extinguishers are in working condition and within
expiry date.
3-5 Ensure that the safety equipments are located as such to
cover all area instantly in case of any accident.
3-6 Items of same category are placed in same location
3-7 All forklifts, if exist, are working by battery and not by
diesel due to its bad influence on the environment
3-8 Items must be stacked up to 3 or 4 story high in order to
save the space
3-9 Ensure that warehouse is protected by security guards
throughout 24 hours
3-10 Security guards must have all the relevant contact
numbers to avoid any occurrence of uncertainty

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AUDIT PROGRAM FOR INVENTORY

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3-11 All Goods Return Notes from showrooms and branches
must be signed by Sales Manager / or Branch Manager
and Warehouse Manager
3-12 Inventory sold but still in warehouse must be identified
and kept separately
3-13 Check the status of the goods if it is all saleable
(Obsolete goods are kept separately)
3-14 Ensure all inventory kept in the warehouse belongs to
company and all goods of company in third party Ware-
houses is comprehensively recorded in the warehouse.

4 Prepare physical count report that should be showing


the following:
4-1 Report should have date and time along with location
visited
4-2 Mention in the report the committee members’ name
with designation, participated in the physical count
including the accountant and the Warehouse Manager
4-3 Describe the procedure carried out for physical count
and reason for selecting samples
4-4 Prepare a summary for the items physically counted by
us comparing it with the books with the explanation of
of variances (if any).
4-5 Ensure that all personnel participated in the physical
count should sign the inventory count sheet

5 Preparation of report should include all points mentioned


previously while attending the physical count in step # 3
above.

B Audit Program for showrooms relating inventory


And Petty cash
Make surprise physical count for inventory available in
showroom and branches to ensure all items recorded in
books are available in the warehouse and observe the
following:

6 Do same procedure from 1 to 5 and ensure while taking


into consideration step # 3 the following:
6-1 Ensure all items in display are in good condition and
nicely stacked.
6-2 Observe the sales persons’ dress-up and dealing with the
customer.
6-3 Observe that the decoration material used in the show

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AUDIT PROGRAM FOR INVENTORY

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room must be good looking and attractive
6-4 Inquire about non moving and obsolete items and ensure
that those are not displayed on the shelves
6-5 Inquire about testers and any expired items
6-6 Ensure all products available in showroom related to the
company and all goods of company in third party Show
room is comprehensively recorded in the showroom
7 Make surprise physical cash count of the showroom and
Ensure, the cash counted must reconcile with the slips
showing sale to customer and inquire about petty cash
Imprest amount
8 Open the teller machine and inquire about any unusual
and abnormal things noticed
9 Value of petty cash imprest must be agreed with what
approved by the Financial Manager

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