Inventory - part 2

In this lesson

1. 0:00 Perpetual inventory systems and auditor counts
2. 0:48 Testing completeness and existence during counts
3. 1:25 Investigating inventory discrepancies and control weaknesses
4. 2:39 Cut-off assertion for purchases and receipts
5. 4:21 Cut-off assertion for sales and dispatches
6. 5:36 Valuation principles and net realisable value
7. 7:08 Standard costing appropriateness and verification
8. 8:26 Testing standard costs against actual invoices

About this lesson

You'll explore the critical audit procedures for inventory counts, including test counts for completeness and existence, and how to identify control weaknesses when discrepancies keep recurring. You'll also master cut-off procedures—ensuring purchases and sales are recorded in the correct period using goods received notes and goods despatch notes—and understand how to verify inventory valuation at the lower of cost and net realisable value. Finally, you'll see how to audit standard costing in manufacturing environments by tracing standard costs back to actual supplier invoices and payroll records, ensuring they reflect real-world costs. This content is essential for Audit and Assurance (AA) and Advanced Audit and Assurance (AAA) papers, where inventory is a high-risk audit area and cut-off and valuation assertions are frequently tested in both objective tests and case study exams.

Duration: 9m