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Unformatted text preview: ns of the previous year’s audit plan that involved inventory.
(See Box 7 for audit plan extracts.) Mark observes that last year’s audit was more traditional in
approach and the focus of the audit team’s analysis was on financial statement outcomes as 24 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o opposed to business activities and processes that determine the outcomes. Mark concludes that
last year’s inventory workpapers are of little use in determining how to audit the logistics and
distribution process this year. Box 7
Extracts from Previous Year’s Inventory Audit Plan
Inventory analytical review
Compare with prior year and investigate significant variances:
- Inventory levels at individual warehouses.
- Inventory turnover ratios by warehouse and on a category basis.
- Inventory levels on an individual store basis and by category within store.
- Attend a count at a sample of retail stores to test key controls over count.
- Test key controls over cycle-count procedure.
- Pick a sample of items and test current cost based on latest receiving report with
inventory cost reported at year-end. Follow-up any significant differences.
- Follow-up on the valuation of any items noted as obsolete, damaged, or slow moving
at count observations.
- Examine gross margins in first month of next year by product category to determine
if any are significantly lower than last month of previous year.
- Identify all inventory that has been in warehouses for longer than six months.
Follow-up with management to ensure an allowance has been made for obsolescence
consistent with this analysis. 25 n KPMG/University of Illinois
Business Measurement Case Development and Research Program July 1999o Appendix I
Core Business Processes Description
Brand and Image Delivery
This core process contains the key elements of translating the strategic plan to operational plans.
It includes choices about format/distribution channels, lines of business, and all matters relating
to the communication and presentation of the company that might affect a customer’s perception.
Basically, this process deals with high-level questions about engaging potential customers’
interest in a company. Product/Service Delivery
This core process contains the key elements of the supply chain from determining product/service
mix through delivery of product/service to customer. This process deals with all aspects of the
provision of goods and services including pricing to the point where the customer is ready and
able to purchase them. Customer Service Delivery
This core process contains the key elements for the delivery methods that contribute to the
customer’s perception of the company. This process deals with how the company is able to
convert its capacity to deliver product/services to the actual sales of these products/services and
what level of service is provided after sale. Resource Management Processes Descri...
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- Fall '08