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Unformatted text preview: ish methods to capture and accumulate
costs for work in process that account for repair or
manufacturing performed by an independent third party, such
as contractors or other government activities? The cost for
work in process will be based on documented cost incurred.
The process used to validate such work-in-process costs
should be based, to the maximum extent possible, on
reporting mechanisms used for contract management, project
management, or other similar purposes. 96. Does the system provide the ability, where the standard cost
method is being used to record costs for work in process, to
record standard costs and actual costs for each inventory
item, in order to support usage and cost variance analysis?
Standard costs will include the anticipated amounts of
material, labour, overhead, and other applicable factors. IT Audit Manual Volume III KD Reference 69 IT Audit Manual
Does the system track actual and standard cost variances for
materials (price and usage), labour (rate and efficiency), and
overhead (actual and applied) when a standard cost method is
used? 98. Does the system record reasons for significant deviations
between standard and actual costs? 99. KD Reference Does the system provide capabilities to support adjustments
of rates and dispositions of variances by performing periodic
allocations? 100. Does the system match costs and revenues within the periods
they were incurred or realized to identify gains or losses from
101. Does the system support analysis of operations on an annual
basis to determine if revenues are sufficient to cover the costs
of the entire inventory program?
102. Does the system provide sufficient transaction audit trails to
support balances of inventory shown on the agency's general
ledger and changes in those balances?
103. Does the system maintain the documentation supporting
inventory transactions until it is audited for accuracy and
approved by external auditors, but not for less than 3 years?
Retention may be longer when...
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