Exam 13: Auditing the Inventory Management Process

For the purpose of determining proper cutoff for inventory,the auditor will select a sample from which of the following for a few days before and after year-end?

An auditor has accounted for a sequence of inventory tags and is now going to trace information on a representative number of tags to the physical inventory sheets.The purpose of this procedure is to obtain assurance that

The safeguarding of inventory most likely includes

You are auditing SBT,which has a December 31^st year-end.On December 24^th,the person responsible for processing receiving reports and recording the receipt of inventory became very ill and was out of the office for a week.Due to the company's small staff and the holiday season,a number of the receiving reports were not processed on a timely basis.As an auditor,on which assertion would you place a high importance for this entity and how would you test for it?

Inventory should be valued using the lower-of-cost-or-market rule.

Shipping orders are forwarded from the revenue process to

Which of the following is not a misstatement related to the occurrence assertion for inventory?

Once the controls in the inventory system have been tested,the auditor sets the level of control risk.

The audit of the inventory management process is affected by the audit results from multiple other processes.Identify the processes,other than the inventory management process,that affect the audit of inventory and explain how each affect the audit of inventory.

Which of the following is not one of the independent auditor's objectives regarding the examination of inventories?

To gain assurance that all inventory items in an entity's inventory listing schedule are valid,an auditor most likely would trace

Which of the following control activities would most likely be used to maintain accurate perpetual inventory records?

Inherent risk is typically assessed at a low to moderate level for inventory due to the nature of the asset.

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement assertion of

An entity maintains perpetual inventory records in both quantities and dollars.If the assessed level of control risk is high,an auditor would probably

Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's inventory valuation?

State the six functions that make up the inventory management process.For each function,identify the related documents and/or records that would be used by a manufacturing company.

The auditor tests the quantity of materials charged to work in process by tracing these quantities to

When an auditor tests an entity's cost accounting system,the auditor's tests are primarily designed to determine that

The auditor's observation of inventory is a generally accepted auditing procedure.