INV - INVENTORY CONTROL AUDIT BACKGROUND: The Stores...

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Sheet1 Page 1 INVENTORY CONTROL AUDIT BACKGROUND: The Stores Division was newly created in FY xx, and was not audited last year because it was organizing itself and changing the way the city's inventories were managed. The city has 22 inventory locations including a central supply location that buys office supplies in bulk and then resells to the operating departments. This audit will evaluate the internal control over the inventory system. We will test and evaluate the reorder levels and quantities of goods purchased. In addition, the quantity on hand will be reviewed. This audit will not test inventory pricing theory or the method by which stock is issued. Those items are covered in other audits. SCOPE: The audit period will be for the last fiscal year for test work and the last day of the field work for the evaluation of internal control. Internal control is used in this audit to mean the controls in place that insure the efficient management of the city's inventory locations. The city uses a perpetual inventory system (the balances are updated twice per week). Organizationally, the Stores Division is under the management of the Finance Director, and the manager for the division reports directly to him. PLANNING: 1. Prepare an entrance letter and forward it to the Stores Division Manager and the Finance Director. 2. Conduct an in-house review of past audit files, budget documents, Service Level Summaries, and external auditors' reports. 3.
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This note was uploaded on 05/16/2011 for the course AUDITING 201 taught by Professor Unknown during the Spring '11 term at Symbiosis International University.

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INV - INVENTORY CONTROL AUDIT BACKGROUND: The Stores...

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