审计学学习指导 21.docx

审计学学习指导 21.docx

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审计学学习指导21

Chapter21

AuditoftheInventory

andWarehousingCycle

WefindChapter21difficultforstudentstounderstandbecauseofthechapter'semphasisonauditingtheinventoryofamanufacturingcompany.Itworksbettertodiscusstheauditofinventoryforaretailorwholesalecompany.Attheendofthechapter,webringinthecomplexitiescausedwheninventoryismanufacturedratherthanpurchased.

Thefollowingaretopicareaswecover:

⏹Chapteropeningvignette

⏹Differencesbetweeninventoryandotherauditareas

⏹Howe-commerceaffectsinventorymanagement

⏹Partsoftheauditofinventory

⏹Physicalobservation

⏹Auditofpricingandcompilation

⏹Integrationofthetests

ChapterOpeningVignette–“PhantomInventory”

Thisvignetterevolvesaroundthewell-knownfinancialstatementfraudatPhar-Morwherebyseniormanagementrecordedfictitiousinventoryandmanipulatedinventoryvaluestooverstateinventoryandunderstatecostofgoodssold.Weusethevignettetoillustratethechallengesassociatedwithauditingclientswhohavemassiveamountsofinventoryitemslocatedinnumerouslocations.AsstudentsvisualizethevolumeofproductscarriedbyaretailchainlikePhar-Mor,theyquicklyrecognizetheopportunitiesmanagementmighthavetomanipulateinventoryvalues.Thevignettealsoprovidesaniceopportunitytointegratediscussionsaboutsamplesizesfortestsofdetails（fromChapter17）.Discussionabouttheauditor’sdecisiontoonlyvisitfourof300storesandtheauditor’sadvancedisclosureofthelocationstobevisitedhelpintegratesamplingconceptsintothischapter’sfocusonauditissuesrelatedtoinventory.

DifferencesBetweenInventoryandOtherAuditAreas

Inthissection,webrieflyaskstudentstoidentifythemajordifferencesbetweentheauditofinventoryandanaccountsuchasaccountsreceivable.

HowE-CommerceAffectsInventoryManagement（page698）

WethendiscusshowcompaniesareusingtheInternettoprovideaccesstoinventoryinformationformanagementandexternalparties,includingcustomersandsuppliers.Companywebsitesfrequentlyprovideinformationaboutproductdescriptions,quantities,unitprices,andinventorylocations.Wediscusshowthisexpandedaccesstoinventorymanagementinformationmayincreasebusinessrisks,ifaccessisnotproperlycontrolledandrestricted.Reviewquestion21-3andproblem21-26provideausefulbasisforthisdiscussion.

PartsoftheAuditofInventory（page699）

Westartthissectionbyfirstassumingnoperpetualrecordsforawholesalecompany.T-21-1andT-21-2areintendedtoshowthatcostofgoodssoldisaresidual,andendinginventoryisauditedindependentlyofanyothercycles.

（SeeT-21-1andT-21-2）

Whentherearenoperpetuals,therearethreemajorpartsofauditinginventoryasshowninT-21-3.Thesecanbeshownasthestepsindetermininginventoryvalue.

（SeeT-21-3）

Nowaddperpetualrecords,includingquantitiesandunitcostsandseetheconnectiontotheauditor’sproceduresassummarizedinT-21-4.

（SeeT-21-4）

Atthispoint,theperpetualrecordscanbeshownasalinkbetweensalesandinventory,andacquisitionsandinventory.WeemphasizehowtheinformationgetsintotheperpetualsandhowitistestedasapartoftestsofcontrolsandsubstantivetestsoftransactionsbyusingT-21-5.

（SeeT-21-5）

Threemajorpartsofauditinginventory:

1.Physicalobservation-relatedtoperpetuals（units）

2.Pricetests-relatedtoperpetuals（prices）

3.Compilation-independentofotherareas

Itisalsopossibletogoonestepfurtherandshowhowperpetuals,includingtotaldollarbalances,affecttheaudit.Wedonotordinarilydothatbecausewefindthatitconfusesmoststudentswithoutstrongaccountingsystemsbackgrounds.

PhysicalObservationofInventory（page706）

Startbybringingoutthefollowingpoints:

（Wefinditimportanttouseanexampletoillustrateeachpointinthisarea.）

⏹Distinctionbetweenauditor'sandmanagement'sresponsibilities

⏹SASrequirements-SAS1（AU331.09）

⏹Thetwomostimportantinternalcontrolsinthephysicalcountandtestsofthosecontrols:

1.Perpetualrecords（masterfiles）

2.Properinventoryinstructions

⏹Auditdecisionsandfactorsaffectingeachdecision

1.Extenttowhichassessedcontrolriskwillbereducedduetothetwocontrolsabove（affectsthefollowingthreedecisions）

2.Samplesize

3.Itemstoselect

4.Timing

⏹Whattheauditordoesduringphysicalexamination（SeeTable21-2onpage709）

⏹Recordingtestcounts-whydoneandhow

⏹Obtainingcutoffinformation-importance,how,anddocumentation

NextwecoverafewmiscellaneousaspectsofthephysicalobservationbyuseofthefollowingReviewQuestions:

⏹21-5-perpetualrecords,ifconceptshavenotalreadybeencovered.（T-21-4isusefulagainatthispoint.）

⏹21-6-deficientinternalcontrolsovercountinginventory

⏹21-7-controloftestcounts

⏹21-10-controloftags

AuditofPricingandCompilation（page709）

Firstwedefinetheterms“pricing”and“compilation”usingthepreviouslypreparedtransparency（T-21-2-stepsindetermininginventoryvalue）.

NextwecoverReviewQuestion21-14,tomakesurestudentsunderstandtheissuesinvolvedinpricinginventory.Weaskquestionsorgooverproblemsasfollows:

⏹Whatcontrolswouldenabletheauditortoreducepricetests?

⏹Whymightperpetualinventoryrecordsenabletheauditortoreducetesting?

（Wegothroughthelogicfromtestsofacquisitionstocomparisonofunitcostsontheinventorysummary.）

⏹ReviewQuestion21-9-observeinventoryforobsolescence.

⏹Howmightauditsamplingbeusedinpricetestsofinventory?

⏹Case21-34-thisisadifficultcase,butitnicelyillustratesvarioustypesofpricingmisstatements.

NextwerefertoTable21-3（page711）andidentifyseveralinventorycompilationprocedurestypicallyperformed.Theemphasisisonwhyeachisdone.

IntegrationoftheTests（page713）

Oncethebasicshavebeencovered,weliketomakesurethestudentsunderstandwhatwasdiscussed.Thefollowingarecoveredifpossible（seetopofnextpage）:

⏹Problem21-24-purposeofaudittests

⏹Problem21-25-misstatements,controlstopreventmisstatements,andsubstantiveauditprocedures

⏹Useofanalyticalproceduresateachstageoftheauditofinventory.（SeeProblem21-30）

⏹Useofthecutoffinformationforsalesandpurchasesobtainedduringthephysicalcounttotestsalesandpurchasescutoff.Thisisagoodopportunitytoillustratethetie-inofphysicalobservationwithsales（Chapter14）,andacquisitions（Chapter19）.（SeeProblems21-31or21-33）.

⏹Additionalproblemsthatarisewhenworkinprocessandfinishedgoodsinventoryareintroduced.

⏹ReviewofFigure21-6（page713）anditsinterrelationships.

（SeeFigure21-6）

CHAPTER21

CROSS-REFERENCEOFLEARNINGOBJECTIVESANDPROBLEMMATERIAL

LearningObjectives

Review

Questions

Multiple

Choice

Questions

Discussion

Questionsand

Problems

Cases

21-1Describethebusinessfunctionsandtherelateddocumentsandrecordsintheinventoryandwarehousingcycle.

21-1,21-2,

21-4

21-18,21-19,

21-20

21-21,21-22,

21-24.21-25

21-2Describehowe-commerceaffectsinventorymanagement.

21-2,21-3

21-26

21-3Explainthefivepartsoftheauditoftheinventoryandwarehousingcycle.

21-5

21-5

21-4Designandperformaudittestsofcostaccounting.

21-4,21-5

21-19

21-21,21-22,

21-23,21-24

21-5Applyanalyticalprocedurestotheaccountsintheinventoryandwarehousingcycle.

21-9,21-13

21-20

21-30

21-6Designandperformphysicalobservationaudittestsforinventory.

21-6,21-7,

21-8,21-9,

21-10,21-11,

21-17

21-20

21-21,21-22,

21-24,21-25,

21-27,21-28,

21-29,21-31

21-33

21-7Designandperformaudittestsofpricingandcompilationforinventory.

21-9,21-12,

21-14,21-15

21-20

21-21,21-22,

21-24,21-25,

21-27,21-32

21-34

21-8Integratethevariouspartsoftheauditoftheinventoryandwarehousingcycle.

21-2,21-15,

21-16

21-21,21-22

RELATIONSHIPOFINVENTORYTO

OTHERACCOUNTSWHENTHEREARE

NOPERPETUALRECORDS

Beginning

Inventory

+

Purchases

of

Inventory

–

Ending

Inventory

=

Costof

GoodsSold

AuditedinAuditedprimarilyAuditedResidual

prioryearthroughTOC,through

STOT,analytical

analyticalpro-procedures

ceduresandandtestsof

analysisofdetailsof

purchasesbalances

STEPSINDETERMINING

INVENTORYVALUE

Countinventory

usingtags

orcountsheets

Summarize

inventoryby

description

Determine

correctunitcost

ofinventory

Extendpriceand

quantityandaccumulateextendedtotals=total

inventoryvalue

Recordingeneral

ledgerbyajournal

entry

Includein

financialstatements

THREEPARTSOFINVENTORY

AUDIT

1.Physicalobservation-independentofotherauditareas.

2.Testsoftheunitcosts（pricetests）-independentofotherauditareas.

3.Extensions,footingsandtracingofinventorylisting（compilation）-independentofotherauditareas.

RELATIONSHIPOFINVENTORYTO

OTHERACCOUNTSWHENTHERE

AREQUANTITIESANDUNIT

COSTSONPERPETUALS

Beginning

Inventory

+

Purchases

of

Inventory

–

Costof

GoodsSold

=

Ending

Inventory

AuditedinAuditedprimarilyAuditedResidual

prioryearthroughTOC,through

STOT,analytical

analyticalpro-procedures

ceduresandandtestsof

analysisofdeta