Question
Following are audit procedures commonly performed in the inventory and warehousing cycle for a manufacturing company: Read the client's physical inventory instructions and observe whether
Following are audit procedures commonly performed in the inventory and warehousing cycle for a manufacturing company:
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Read the client's physical inventory instructions and observe whether those responsible for counting the inventory are following the instructions.
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Use audit software to compute inventory turnover by major product line and compare it to turnover in the prior year.
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Account for a sequence of inventory tags and trace each tag to the physical inventory to make sure it actually exists.
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Compare the client's count of physical inventory at an interim date with the perpetual inventory master file.
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Trace the auditor's test counts recorded in the audit files to the final inventory compilation and compare the tag number, description, and quantity.
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Compare the unit price on the final inventory summary with vendors' invoices.
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Account for a sequence of raw material requisitions and examine each requisition for an authorized approval.
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Trace the recorded additions on the finished goods perpetual inventory master file to the records for completed production.
Required
Select any Five (5) out of the above seven (7) balance-related audit procedures, state the purpose(s) of each of the procedures. 10 marks
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