SA 501 Chart 1

Auditor’s Objective

To obtain SAAE

Inventory Litigation and Claims Segment Information

Existence and condition Check whether complete or not Presentation and Disclosure in
accordance with AFRF
 SA 501 Question

Write a short note on“Physical How would an auditor proceed

attendance by auditor during to obtain SAAE regarding the
inventory taking”. existence and condition of
inventory?

As per SA 501 “Audit Evidence Management Inventory is material Date other than date of FS Not able to attend due to Impracticable Custody and control of a third Unable to Obtain SAAE
- Specific Considerations For unforeseen circumstances party
Selected Items”

ordinarily establishes When inventory is material to physical inventory counting is the auditor shall concerning the
procedures the financial statements, the conducted at a date other than If the auditor is unable to perform alternative audit When inventory under the existence of inventory or
auditor shall obtain sufficient the date of the attend physical inventory procedures custody and control of a third adequacy of procedures
appropriate audit evidence financial statements counting due to unforeseen party is material to the adopted by the management in
regarding the existence and circumstances financial statement respect
condition of inventory by of physical inventory count
under
which inventory is physically to obtain sufficient appropriate
counted at least once a year to perform audit procedures to audit evidence
serve as a basis for the obtain audit evidence about the auditor shall make or regarding the existence and the auditor shall obtain
preparation of the financial Attendance at Physical Perform Audit Procedures observe some physical counts condition of inventory. sufficient appropriate audit the auditor should make a
statements inventory counting on an evidence reference to a scope limitation
alternative date, regarding the existence and in
condition of that inventory by his audit report.
whether changes in
performing one or both of
over the entity’s final inventory inventory between the count If it is not possible to do so,
the following:
and, if applicable, to ascertain to records date and the date of the the
the reliability of the financial statements are and perform audit procedures auditor shall modify the opinion
entity’s inventory system. properly recorded. on intervening transactions. in the auditor’s report in If the inventory is not
accordance with SA 705. disclosed appropriately in the
Request Confirmation Perform AuP financial statements,
Evaluate Observe Inspect Perform to
the auditor should issue a
determine
modified opinion.

Request confirmation from the Perform inspection or other

Mgt.’s Instruction and
procedures
the performance of the inventory Test Counts
third party as to the quantities audit procedures appropriate in
management’s count procedures whether they accurately
and condition of the circumstances
reflect actual inventory count
inventory held on behalf of the
results.
entity

For recording and controlling

results of the entity’s physical

inventory counting
 SA 501 Chart 3 Litigation
and Claims

Identify litigation and claims ROMM identified w.r.t litigation Modify the opinion in Written representation
and claims accordance with SA 705

Perform AuP to Identify From Mgt. and TCWG

Litigation and Claims by If risk is identified then If mgt. does not permit auditor Legal counsel refuses to Auditor is unable to obtain
to communicate with legal respond
counsel

All known Litigation and claims

Inquiring Reviewing Seek communication with SAAE affecting Financial Statements
entity’s legal counsel

Management & others MoM of TCWG Correspondence with Legal Legal expense account Have been disclosed to auditor and appropriately accounted for
counsel If L& R prohibits such direct
communication

Perform alternative procedures

 SA 501 Chart 4 Segment
Information

The auditor shall obtain

sufficient appropriate audit
evidence

regarding the presentation and

disclosure of segment
information

in accordance with the

applicable financial reporting
framework by

Obtaining an understanding of performing analytical

the methods used by procedures or other audit
management in determining procedures appropriate in the
segment information circumstances.