Following are audit procedures commonly performed

in the inventory and warehousing cycle for a manufacturing company:

1. Read the clients physical inventory instructions and observe whether they are being

followed by those responsible for counting the inventory.

2. Use audit software to compute inventory turnover by major product line and compare

it to turnover in the prior year.

3. Account for a sequence of inventory tags and trace each tag to the physical inventory

to make sure it actually exists.

4. Compare the clients count of physical inventory at an interim date with the perpetual

inventory master file.

5. Trace the auditors test counts recorded in the audit files to the final inventory compilation

and compare the tag number, description, and quantity.

6. Compare the unit price on the final inventory summary with vendors invoices.

7. Account for a sequence of raw material requisitions and examine each requisition for

an authorized approval.

8. Trace the recorded additions on the finished goods perpetual inventory master file to

the records for completed production.

Required:

a. Identify whether each of the procedures is primarily a test of control or a substantive test.

b. State the purpose(s) of each of the procedures.