AUDB313 INVENTORY MCDO

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Inventory cycle

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What is perpetual inventory record?

A listing of inventory components

A cummulative record of quantities on hand

A summary of overhead costs applied in WIP inventory

Perpetual inventory record is a cumulative of quantities on hand, as well as prices, for any particular item or class of inventory

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Which one is NOT way to control perpetual inventory master files

Adequate control over count sheets or tags

Independent interval verification from supervisor

Proper instructions for the psysical count

Its actually Independent interval verification of the counts. Independent internal verification involves review, comparison, and reconciliation of inventory items. since it is called "independent" the internal auditor will do this interval verification of the counts.

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What is the purpose of test of control?

to evaluate the effectiveness of the design and operation of the ICS

to evaluate the effectiveness of the design of the ICS

to evaluate the effectiveness of the operation of the ICS

The purpose of tests of controls for the manufacturing transactions is to evaluate the effectiveness of the design and operation of the internal control structure policies and procedures.

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Which one is NOT gonna be consider by auditor on first time engagement

Ensure opening balance of the current period of FYE

Appropriate accounting policies applied

Prior period's closing balance of assets and liabilities

The prior period’s closing balances of all accounts have been correctly brought forward to the current period or, when appropriate, have been restated.

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One of the audit step after observation is:

The auditor makes test counts and checks that quantities agree with count sheets or count tags.

The auditor observes the inventory count teams to ensure that they understand the inventory instructions, and that they are carrying out the inventory counts diligently and competently.

The auditor should examine the confirmations obtained by the client firm from the custodians of any independent warehouses that are used.

The auditor should examine the confirmations obtained by the client firm from the custodians of any independent warehouses that are used after the observation as we already get the infomation collected from the client. The other 2 choices are from during observation period.

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