Auditing and Assurance: Concepts and Application 1

Management assertions on Substantive Test

inventory
a. obtain inventory list and
- Existence and occurrence reconcile to ledgers
- Review and scrutinize client’s inventory taking plan
- Check the cut-off of documents before count
- Determine if there were goods received during
b. Observe physical inventory
the count and if properly segregated count and conduct test counts
- See all merchandise is tagged and no items are double-tagged
- Determine if compilation sheets and pre-numbered inventory tags are
properly controlled
- Watched for damaged and obsolete inventory
- Inquire about slow-moving items
- Alert for possible hidden inventories or inventories with an empty
containers or boxes
Auditing and Assurance: Concepts and Application 1

Management assertions on Substantive Test

inventory
a. obtain inventory list and
- Existence and occurrence reconcile to ledgers
b. Observe physical inventory
count and conduct test counts

c. Confirm inventories in public

warehouse and with consignees
Auditing and Assurance: Concepts and Application 1

Management assertions on Substantive Test

inventory
a. obtain inventory list and
- Existence and occurrence reconcile to ledgers
b. Observe physical inventory
count and conduct test counts
Auditing and Assurance: Concepts and Application 1

Management assertions on Substantive Test

inventory

Inquire inventory ownership and

- Rights and obligations examine necessary documents