Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

IAP - Help!

Shoe FairyShoe Fairy Settling In NicelyRegistered Posts: 15
I completed this simulation earlier this month and have been assessed as competent subject to additional work.

I have to answer questions regarding the objectives of attending a stock count - i can think of three...
1) Completeness
2) Rights & Obligations
3) Existence

Are there any others?

Also, does anyone know what the substantive tests that are performed at a stock count are?


  • Steve CollingsSteve Collings Experienced Mentor Registered Posts: 997
    Attendance at inventory count is an observation procedure primarily to establish whether the procedures adopted by management would reduce the risk of material misstatement in relation to the inventory figure. This also satisfies the 'existence' assertion.

    In terms of substantive testing, think about issues such as how the auditor would check the count using, for example, directional testing (have a look at the article I uploaded here as inventory is mentioned in that). Think about things like cut-offs and which assertion this satisfies.

    If a company has long-term contracts then you could bring in the 'rights' assertion. For valuation think about what IAS 2 says about inventory i.e. lower of cost/net realisable value. This should then prompt you to think how would you confirm 'cost' or 'net realisable value'.

    Hope that helps.


  • Shoe FairyShoe Fairy Settling In Nicely Registered Posts: 15
    Thanks Steve:001_smile:
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