Auditing q's from my College

stuartander

Hi,

I have a question can anyone help plz,

i need to state the substantive tests to be performed on stock for the following objectives:
1. stock is recorded in the balance sheet at lower of cost or NRV.
2.Stock is recorded at the correct qty.
3.Only the stock owned by the company is recorded.

Any ideas??

Thanks

AK002

Is this part of a simulation? If so I think you should find the answer out for yourself.

stuartander

no they are sample questions writen by my college off the student portal..

sdv

stuartander wrote: »

Hi,

I have a question can anyone help plz,

i need to state the substantive tests to be performed on stock for the following objectives:
1. stock is recorded in the balance sheet at lower of cost or NRV.
2.Stock is recorded at the correct qty.
3.Only the stock owned by the company is recorded.

Any ideas??

Thanks

Auditing is all about verification and authentication of assets, liabilities, income and expenses. An auditor has to satisfy himself/herself that the assets/liabilites declared on the balance sheet (Sofp) are true and fair.

your Q1 - how would you verify that the value of stock declared on sofp is "at lower of cost or NRV"

your Q2 - how would you verify that the quantity of stock declared on the stock card is true?

Your Q3 - how would you verify that the value of stock declared on sofp is not owned by a third party?

what tests would you carry out?
and what percentage of tranactions verfication is accetable to satisfy the auditor?
what method of sampling tests would you use? random, systamatic random, systamatic etc....

I hope this helps.

stuartander

Thanks but have got the answers correct anyways,
Thanks