Auditing for Inventory

This assessment task can be undertaken individually or in groups of two. It does require you, if you work in a group, to investigate the same store. This may not be possible if you are both not physically in the same area.

As part of this assessment, you are required to undertake an inspection of any store of Cold Storage, "The fresh food people" (https://coldstorage.com.sg/) which sells various food items (and has checkouts).

Scenario:

You are a senior auditor for Check and Tick auditing firm. You have been advised that Check and Tick are likely to be appointed the external auditor of the Cold Storage store you visited. While you are waiting to find out whether the appointment will take place, you are undertaking an assessment of the requirements for the inventory count.

As part of this process you undertake a site inspection of the store and write a memorandum to your team that outlines what you have discovered in your onsite inspection and the known requirements for an inventory count of this nature. Begin with an overview of the Cold Storage store you visited. Discuss how long you were there and how many times you visited (You may notice that the location of the store has an influence on the kinds of inventory the store carries).

In your memorandum, you will need to take into account the following matters:

1. The kinds of inventory held by the store and the risks associated with each kind of inventory. A drawing of the layout of the store might help here (you wont be able to access the loading area or the storage area that is closed to the public). Then, you would need to cover the various audit objectives for inventory and discuss which are relevant to your task.

.a)Existence

.b)Completeness

.c)Accuracy

.d)Cutoffs

.e)Valuation

.f)Rights and obligations (ownership)

2. Physical security of the inventory.

3. The processes and procedures you expect management to undertake during the stocktake and how your team will be organized to assess those processes and procedures.

4. The difficulty of undertaking such a large inventory count, what will be the process you expect to be undertaken by management, in the store and by your team

5. The difficulty of undertaking a number of inventory counts in the store

6. Finally, you should consider any areas that you have not been able to inspect during your visit onsite. Outline where those areas were and, when you are able to access them, what matters you will need to investigate and the data and information you will need to collect from those areas.

Important: When you undertake your onsite inspection, you cannot approach any employee or manager of the store and speak to them. Since your firm is yet to be appointed as external auditors, it would not be appropriate. You may not represent to an employee or manager that you are undertaking research. If you are approached by a member of the stores staff, you may inform the staff that you are university students undertaking a piece of assessment and refer the staff member to the lecturer for clarification.

Some points to remember:

Long essays are not required here. This is a memorandum be concise. The business world is a busy place, full of people with little time. Your ability to keep to the point will be assessed in this task.

It is an accounting assignment and you are required to communicate clearly. Communication is a required skill for accounting graduates. English expression is important and is also an indicator that you understand the purpose of the memorandum to inform others

Your memorandum should relate to the appropriate accounting and auditing standards.

Auditing for Inventory This assessment task can be undertaken individually or in groups of two. It does require you, if you work in a group, to investigate the same store. This may not be possible if you are both not physically in the same area. As part of this assessment, you are required to undertake an inspection of any store of Cold Storage, "The fresh food people" (https://coldstorage.com.sg/) which sells various food items (and has checkouts). Scenario: You are a senior auditor for Check and Tick auditing firm. You have been advised that Check and Tick are likely to be appointed the external auditor of the Cold Storage store you visited. While you are waiting to find out whether the appointment will take place, you are undertaking an assessment of the requirements for the inventory count. As part of this process you undertake a site inspection of the store and write a memorandum to your team that outlines what you have discovered in your onsite inspection and the known requirements for an inventory count of this nature. Begin with an overview of the Cold Storage store you visited. Discuss how long you were there and how many times you visited (You may notice that the location of the store has an influence on the kinds of inventory the store carries). In your memorandum, you will need to take into account the following matters: 1. The kinds of inventory held by the store and the risks associated with each kind of inventory. A drawing of the layout of the store might help here (you won't be able to access the loading area or the storage area that is closed to the public). Then, you would need to cover the various audit objectives for inventory and discuss which are relevant to your task. . a) Existence . b) Completeness . c) Accuracy . d) Cutoffs . e) Valuation . f) Rights and obligations (ownership) 2. Physical security of the inventory. 3. The processes and procedures you expect management to undertake during the stocktake and how your team will be organized to assess those processes and procedures. 4. The difficulty of undertaking such a large inventory count, what will be the process you expect to be undertaken by management, in the store and by your team 5. The difficulty of undertaking a number of inventory counts in the store 6. Finally, you should consider any areas that you have not been able to inspect during your visit onsite. Outline where those areas were and, when you are able to access them, what matters you will need to investigate and the data and information you will need to collect from those areas. Important: When you undertake your onsite inspection, you cannot approach any employee or manager of the store and speak to them. Since your firm is yet to be appointed as external auditors, it would not be appropriate. You may not represent to an employee or manager that you are undertaking research. If you are approached by a member of the store's staff, you may inform the staff that you are university students undertaking a piece of assessment and refer the staff member to the lecturer for clarification. Some points to remember: 9 9 Long essays are not required here. This is a memorandum - be concise. The business world is a busy place, full of people with little time. Your ability to keep to the point will be assessed in this task. 9 9 It is an accounting assignment and you are required to communicate clearly. Communication is a required skill for accounting graduates. English expression is important and is also an indicator that you understand the purpose of the memorandum - to inform others 9 9 Your memorandum should relate to the appropriate accounting and auditing standards