here below is given points as you need to add and write explanation for the written article (Covid 19- consideration for inventory audit testing) need do some modify.

Issues and discussion:

Management

Para 2:

1. Try to input some government rules and regulations on interstate travel in Malaysia and the impact on multilocation inventory management.
2. Thus discuss how the management can cope with the constraint from the government rules and regulations (if the physical count is not possible)

Para 3:

1. The impact on the Cost of the inventory if management could not project the future sales accurately?

Para 4:

1. "NRV = total sales quantity of sales projected less reasonable estimate of expenses?? May use the definition in the accounting standard.
2. This paragraph is not really organized. Inventory is slowly moving... they will be sold in the future? Did inventory value lower than the selling price?
3. May mention about the impact of covid on NRV (NRV=FV-CTS, fair value decrease? Cost to sell increase?)

Para 5:

1. "Better to write down the inventory whilst generating income than accumulate losses and eventually write down"?
2. Input the prudent concept

Para 6:

1. Segregation between the inventory that is affected and not affected by COVID is not a must, it is a discussion, initiate the discussion.

Auditors part

Para 9

1. Should performance materiality be highly "integrated"?
2. May input the concept of the impact of reducing the performance materiality on audit procedure. Any additional audit procedure can be considered?

Para 10

1. May input the concept of MFRS 102, storage cost affect the Cost of the inventory, thus impact on the comparison of Cost and NRV, profit margin concept.
2. Dispose of inventory when the storage cost exceeds the value of the item?

Para 11

1. "the records of the financial statements are not the only being evaluated, but also the process itself" - can you further elaborate?
2. Additional points: if the inventory is material to the company FS and there is not sufficient audit evidence to make assurance on the inventory testing, discuss with a professional body.

Recommendation

1. Some of the points from the last article still can be retained
2. Use of live streaming, drone, and cameras but with an additional measure like dual verification: maybe video + picture?

Conclusion

1. " and the business's..."?
2. May further discuss how the management can collaborate with auditors, give some examples.

Here is the article attached: add some explanation accordingly on the para

Issues and discussions

Inventories located at different locations require extra effort for inventory management and monitoring. Estimates might be insufficient since the basis for inventory flow might differ from every location. It is quite impossible to monitor the flow of inventories without referring to actual inventory counts. Having the physical counts is ideal for reflecting actual inventory performance within the period.

The projection for needed inventories will be complex for the management because of the uncertainty of time and condition. The resumption of normal business operations is still unsure as the COVID-19 virus continues to mutate. Operations are still limited, and the market movement is controlled. Businesses have no concrete budgetary plan for production since it is dependent on the market condition. Management can't risk mass production for inventory reserve since it poses a huge risk of loss in the future. At the same time, they cannot completely halt production due to opportunity costs and high period costs that outweigh minimal income. Inventories produced should be based on the latest sales volume during the pandemic, wherein the market is responsive, and the company gains profit.

Inventories held for sale in the ordinary course of business are measured in lower amounts between cost and net realizable value. According to MFRS 102, Net Realizable Value considers the total quantity of sale projected less the reasonable estimate of the expenses like taxes, fees, transportation, disposal, and the likes. Hence, NRV evaluates inventory values. However, as COVID-19 continues, it suppresses firms' ability to forecast optimal inventory and constitutes an accumulation of loss. Furthermore, during the pandemic, inventories are slowly moving and ageing, meaning they will be sold in the future. This means more estimated costs might be incurred, resulting in an inventory valued lower than the selling price. This risks the companies ability to maximize its inventories and generate profit.

As inventories are considered aged, it requires an extensive evaluation of whether the current or excess inventories should be written down. According to MFRS 102, if the estimated cost considerably exceeds the selling price, inventories should be written down and expensed. Considering that the pandemic timeline is uncertain, there is no absolute assurance that the concurrent inventories will be sold enough to generate profit to satisfy period and product costs. It will surely reduce income as it is expensed, but it is better to write down the inventory whilst

generating income than accumulate losses and eventually write down. It will be harder for the management to recover and restructure.

The company produces differentiated products, and are not both are affected by COVID-19. Therefore, it is better to separate inventory categories. Separation of the products affected and not affected by COVID is a must because their treatment and market strategies are different. If the product is affected by covid, the analysis should be done if it will be still sold or written down. On the other hand, if the product is profitable amidst the pandemic, it can be synergized more to produce sufficient income to cover the losses or cost of other product lines. Indeed, separating product categories will b benefit the management's ability to plan and cultivate their inventories more.

Changing an entity's reporting year-end due to inventory still means that there is still further unpredictability. There are only two possibilities, either the condition will get better or worsen. The market is still not active and unstable, making it hard for businesses to revitalize their inventory management. In addition, the delay can impose certain risks with the current inventories like theft, loss, etc. Not to mention that delaying means incurring more additional costs due to compliance like tax.

Accordingly, for auditors, inventories should be appropriately documented and evaluated using alternative procedures to objectively obtain the evidence of net realizable value. One way to prove the evidence of the net realizable value is using roll forward or back. In this method, auditors will delay inventory auditing at a later and safer date. Then, they can apply subsequent measures at a later period to perform and observe inventory count. The goal is to test the accuracy of inventory records and reconcile it at a more favourable period. Also, auditors can get evidence through video documentation if the need for an audit is urgent. This method is considered because it is stated in the ISA 501 that if it is impractical to do physical inventory count and if it would endanger the health of auditors, any proper method can be applied. However, it is important to denote that there are risks associated when auditing is remotely done, as the risk of manipulation and faithful representation of records.

Performance materiality should be highly integrated, especially to industries whose inventory values are affected by the pandemic. Performance materiality refers to the amount that can exist in the accounts caused by omission and errors that do not influence the audit opinion on the concept of having unbiased financial statements. This means that the more the inventories are affected by the adverse effect of COVID, the more variances of the product should be reflected in the statements. Also, this should be part of the audit opinion to measure how great the impact occurred to the company and rule out any biases. In this way, the faithful representation will be followed, and the actual effect of the pandemic will be reflected.

The physical costs associated with keeping the inventories at the warehouse can be dire and unfavourable. Storage costs are additional period costs that the company constantly incurs. The more inventories are kept, the more storage costs will be accumulated. Some examples of this are rent and utilities. Too much storage costs can also be an indicator that the goods are not profitable and in demand. Storage cost should not exceed the value of each inventoriable over time. If it results in this, it is better to consider disposing of them. Most of all, having too many storage costs due to unmarketable reasons exposes more risk of net loss on the statements.

As much as technologies are high-tech and advanced in terms of auditing, it has different implications. Some consider using robotics and other highly productive technologies to proceed to audit during the current situation. As much as it is convincing, it is highly debatable as there is no assurance that the physical counts cannot be manipulated upon video recording or technological tests. Next, the scope of the audit is not maximized since auditors can only get what was only perceived in the screens or systems. And the state or condition of the inventories cannot be assessed whether it is defective or not. Finally, in an audit, the records of the financial statements are not the only ones being evaluated, but also the process itself.

Recommendation

Assign a team or staff that would monitor inventory activities. It is better if they can access through computer records their inventory records pre-Covid for record-keeping. But during the pandemic, they can use applications to monitor inventory warehousing and distribution within various locations. Most significantly, if they are involved with the e-commerce industry. Next, use the current business software or program to keep an up-to-date record of inventories. This tags the management on inventory movement using an end-to-end process. With this, the company can easily document information used for audit and as a basis for future decision-making. Finally, have proper and regular documentation on inventory value. Determine whether they are marketable enough to keep or NRV is still positive. Otherwise, opt to write it down. Provide and submit regular reports monthly to executives to construct an optimal inventory management plan. This will avoid the accumulation or loss and too much storage costs. For auditors, upon initial evaluation of management reports. Segregate inventories depending on their risk and mobility. Marketable inventories should have different audit treatments and judgments from idle inventories. Audit opinion should be specific on a certain inventory depending on their performance and contribution to income. This can be the basis of the company on how to ease and manage differentiated inventories.

Conclusion

The management and auditors' roles are distinct but vital in every business operation regardless of the industry. The management is responsible for overseeing business processes related to inventory management and providing accurate and faithful information. On the other hand, auditors are the ones who evaluate such documents and business processes and provide an audit opinion that would greatly benefit the decision-making of the company. In times like this, both the management and auditors should work hand-in-hand to assure sustainability and the business's