Auditing help needed

DanielJ Registered Posts: 2 New contributor 🐸
Was wondering if anyone knew which substantive test an auditor could do to meet the following objective.

Only stock owned by the company is recorded



  • stuartander
    stuartander Registered Posts: 82 💫 🐯 💫
    All i know is this on substantive testing on stock:

    -Observe inventory stock take
    -Vouch recorded purchases to source documents.
    -enquiry to management as to the ownership

    I hope this helps

  • Steve Collings
    Steve Collings Registered Posts: 997

    Think about the purchasing function of a company, purchasing will produce a purchase order, send the purchase order to the supplier, supplier will ship the goods, goods will come into the warehouse, goods received note will be received, supplier will then invoice the company.

    Inventory at the period end can be vouched to these types of source document as well as other tests such as checking the company has title to the goods.

    Kind regards
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