Describe the audit procedures you would perform

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Question - You are the auditor in charge of Spare Parts Ltd, a wholesaler in motor spare parts. The company operates its business from one large store in Bloemfontein.

The company's inventory consists of a variety of spare parts, ranging from nuts and bolts to motor vehicle engines. All inventories are the property of the entity and are purchased from its holding company (Producers Limited) which acts as manufacturer. The inventory records are fully computerised and a continuous inventory system is in use. The company has no internal audit function, although management does from time to time perform certain tests on the inventory.

During the planning meeting for the forthcoming audit the manager informs you that the annual inventory count will take place on 31 July 2020. The company's year-end is 30 September 2014.

The company's policy is to order inventory in such a manner that there is no inventory in transit during inventory counts, or at year-end.

Describe with motivation the direction in which you will audit inventory.

Describe the audit procedures you would perform to verify inventory account balance?

Reference no: EM132652657

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