1. Audit Field Standards: Audit of Inventory
Session 11

2. Learning Objectives
Understanding Audit Field Standards of Audit of Inventory
Understanding Internal Control of Inventory
Understanding Audit Objectives of Inventory
Being able to design Audit Procedures of Inventory
Understanding of Documents (evidence) to support the records of Inventory
Audit Evidence of Purchasing and Inventory
Confirmation about Inventory
Some Frauds involving Inventory
Examples of Audit Findings of Inventory

3. SPAP – SA Seksi 331
SA 331 – 03 sd 07 – Pengamatan thd Penghitungan Fisik Sediaan
SA 331 – 08 – Sediaan yang berada di Gudang Umum
(Tugas: Mahasiswa membuat resume dan mempresentasikannya dengan beberapa kemungkinan penyimpangan yang mungkin terjadi)

4. The Internal Control Objectives of Inventory
Inventory purchased are needed
Inventory is stored safely in good storage/ warehouse (warehouse is physically good)
Inventory is prevented from theft (warehouse is a closed area for unauthorized persons) and breaking down
Inventory is stacked manageably and easy to be taken out.
Inventory is maintained in a sufficient balance.
Inventory is classified accordingly

5. Activities Need to be Examined
Requesting of purchase activity
Receiving activity (The way of receive)
Moving out activity
Storing/stacking activity
Packing activity

6. Audit Procedures of Inventory
are the steps to be done sequentially to achieve the audit objectives

7. Audit Objectives of Inventory
Transaction Audit Objectives
Occurrence
Completeness
Accuracy
Cut off
Classification
Balance Audit Objectives
Existence
Right and Obligation
Valuation and Allocation

8. Audit Objectives of Inventory
Disclosure Objectives
Occurrence
Right and Obligation
Completeness
Classification and Understandability
Accuracy and Valuation
(Boynton, Modern Auditing 8 edition)

9. Documents (evidences) to support the records of Inventory
PR (Purchase Requisition)
PQ (Purchase for Quotation
Bid Evaluation
Contract or Agreement Letter
PO (Purchase Order)
RR (Receiving Report)
DO (Delivery Order of supplier)
Invoice of supplier
Purchase Return Document
Good Using Document

10. Audit Evidence of Inventory
Inquiries of the client
Documentation
Confirmation
Observation
Physical examination
Analytical procedures
Reperformance

11. Confirmation about Inventory

12. Some Frauds in Inventory
Over or under stating the value of Inventory
Misclassifying Inventory
Scrapping good inventory
Stealing inventory

13. Examples of Audit Findings of Inventory
Condition
Criteria
Causes
Effects
Recommendation