Audit procedures: quantity - part 1

In this lesson

1. 0:00 Understanding physical inventory counts
2. 0:46 Why auditors focus on inventory verification
3. 1:16 Planning the inventory count process
4. 2:02 Auditor procedures during the count
5. 3:14 Pre-count planning and special considerations
6. 5:09 Handling specialist inventory and experts
7. 6:00 Audit procedures for third-party inventory
8. 8:03 Three phases of inventory count testing
9. 10:13 Observing controls and performing test counts
10. 12:22 Post-count verification and reconciliation

About this lesson

You'll discover why companies perform inventory counts despite having electronic systems, what auditors observe during the count process, and how to distinguish between year-end and continuous counting methods. The video walks you through the three phases of inventory counting: before, during, and after. Before the count, you'll learn how to review prior year working papers, discuss arrangements with management, and identify risks like inventory held by third parties or on sale-or-return terms. During the count, you'll explore key audit procedures including observing staff compliance with count instructions, performing test counts for both completeness and existence, and obtaining copies of all count documentation. After the count, you'll see how auditors verify the sequence of count sheets and recast the final inventory listing to confirm accuracy. You'll also work through a practical scenario involving overseas inventory held in a third-party warehouse. This demonstrates how to adapt your procedures when attendance isn't cost-effective, using alternatives like direct confirmations and documentary review instead. By the end, you'll have a structured framework for designing audit procedures across all three phases of the inventory count process, directly applicable to your AA (Audit and Assurance) exams.

Duration: 14m