How Do I Become an Inventory Specialist?

Inventory supervision is an on-site inventory of various physical assets, cash, and securities of the audited unit by the auditors, and appropriate spot checks are conducted. Generally, the inventory reflects the characteristics of the business better than other asset items. Inventory supervision procedures are spot checks and observations performed by auditors during the process of participating in the inventory of the audited enterprise. The purpose of implementing physical inventory supervision is to determine whether the operation of the inventory measurement and inventory recording procedures of the audited enterprise is effective.

Inventory supervision

Inventory supervision is a variety of on-site supervision by the auditor

Formulate inventory supervision plan

Auditors shall, based on the characteristics of the inventory of the audited unit,

Inventory supervision procedures are spot checks and observations performed by auditors during the process of participating in the inventory of the audited enterprise. The purpose of implementing physical inventory supervision is to determine whether the operation of the inventory measurement and inventory recording procedures of the audited enterprise is effective.

In manufacturing and commercial enterprises, inventory plays an important role in accounting statements.

The most applied supervision during the audit is the supervision of inventory. As the amount of inventory at the end of the period directly affects the amount reflected in the company's financial statements, the inventory supervision can effectively confirm the existence and integrity of the inventory and the quality status of the inventory. Therefore, the quality of the supervision procedures is closely related to the quality of the audit report. Auditors have some problems in the understanding and implementation of the inventory supervision disk, which needs our attention in the future audit process. The problems that often occur during the process of inventory supervision are:

Insufficient attention was paid to inventory supervision procedures. In the audit process, in order to ensure the correctness of the carrying amount of the inventory, the relevant inventory information provided by it lacks a careful and careful analytical review, and the obtained unit inventory data is directly used as the audit work paper, which creates a potential audit risk. .

In addition, in the daily audit process, it is easy to ignore the inventory of in-product and off-site inventory (stored in foreign inventory), and it is also easy to generate audit risks. For example, during the audit of a company that produces daily-use consumer goods, we carried out a supervised inventory of the inventory in different places, and checked the amount of the company's books with different places, and found that the quantities vary greatly. Investigating the reason, it was found that a large amount of redemption inventory was placed in the off-site inventory. The part of the redemption inventory was not included in the output tax and was not included in the company's book value. Instead, it entered production costs as normal consumption of production. This situation can not be found only by examining the financial information, which shows the importance of supervision. Due to the different production characteristics of different products in different industries, we have certain difficulties in determining the quantity and amount of products. Therefore, when the financial information is correct, the book quantity and amount are used as the audited quantity and amount. It also easily leads to audit risks.

In addition, in most cases, inventory inventory is difficult and inventories are complicated, which makes us prone to embarrassment and irritability, thereby relaxing the supervision and inventory of inventory, which is also prone to auditing. For example, when taking inventory of a company at a different location, the temperature of the warehouse was close to minus 10 degrees Celsius, and the inventory was diverse and large. In addition, some of the inventory was not neatly arranged. It can be imagined that the inventory was difficult and difficult, but we did not Did not give up the due process of supervision, and carried out a careful and careful inventory one by one. As a result, it was found that the actual points of a certain product were 300 boxes more than the warehouse book. After investigation, it was found that Pan Ying's products were sold on behalf of customers. In response to this weakness in inventory control, we propose that the amount of stored materials should be jointly controlled by the financial staff and the warehouse keeper, and we should not just listen to the keeper's words.

In the process of inventory supervision, attention should be paid to both following the established procedures and grasping the key points to effectively control audit risks.

Develop a physical inventory inventory plan. The level of detail of the plan can be determined according to the size of the audited unit. Of course, making an inventory plan requires a certain understanding of the product production and storage of the audited unit. When drawing up an inventory plan, it is best to invite the leaders of the audited unit to participate and listen to their opinions in order to draw the attention of the audited unit's participation in the inventory. In addition, when drawing up an inventory plan, the auditor should coordinate with the audited unit to do the following: The inventory time should preferably be selected before the end of the accounting period. In fact, in most cases, the supervision is performed after the end of the accounting period, which requires us to compile the inventory balance adjustment table from the inventory back to the end of the period to confirm the correctness of the inventory balance at the end of the period. Inventory selection should be representative. Relevant personnel in the supply, storage, finance, production and other departments should participate. During the inventory, the inventory should stop flowing and be sorted. For production enterprises, the monitoring period should be selected during the production interval. Before the inventory plan is implemented, the auditor shall implement the inventory plan and instructions to each participant.

Take appropriate inventory methods. Prepare an inventory sheet before inventory, and check it with the warehouse custody account. As the warehouse is responsible for keeping custody, this check is generally consistent. Take a sample. After the inventory of the company's inventory personnel, the auditors should conduct sampling, and the sampling sample should generally not be less than 10% of the total inventory. The auditor shall ask the audited unit for the last acceptance report (or warehousing slip) and the last shipping document (or warehousing slip) before the inventory check, as the basis for the cut-off test. Inventory of products. Due to management or production requirements, the inability to interrupt production for inventory counts makes the inventory of products in progress very difficult. For example, we have an inventory of the products in a building ceramics factory. Because the ceramics in the products have strong industrial production characteristics, we will work with the personnel of the relevant departments of production management and related experts to develop a practical inventory plan for inventory. It is fixed, and we count the quantity when firing the kiln as the number of products in process. This ensures that the number of products is true and accurate at a certain point in time. Inventory of off-site inventory. If it is kept by a foreign entity, it is necessary to take appropriate alternative procedures, such as sending a letter of inquiry, checking the original documents, etc. if it is not possible to take inventory in person; if it is kept for the entity, it must be personally supervised. Otherwise, the impact on the opinions of the audit report should be considered. If there are several storage places for a kind of inventory, we should try to complete it once and continuously to prevent relevant personnel from using the gap and colluding to cheat.

Expression and disclosure of inventory supervision results. For the inventory surplus, inventory loss, and damage found during the process of inventory supervision, we must investigate the reasons in conjunction with other audit procedures and consider their impact on the audit report. For example, when we asked for the inventory data of a boiler plant, it showed that there were inventory gains and losses during the inventory process, but when we reviewed its management costs, we did not find inventory inventory gains and losses, we conducted a detailed review and found that the plant Inventory inventory gains and losses both entered the production process directly through the picking list, which resulted in false production costs for the product that month, and inventory surpluses became off-book supplies.

It can be seen that by implementing the inventory supervision procedure, auditors can not only confirm the existence of inventory, confirm its integrity and quality status, but also use observation, inquiry and other methods to understand that the audited unit has been sold and the company has retained it on behalf of the company. The condition of the materials, to prevent the storage of materials on behalf of the inventory materials.

Chinese Certified Public Accountant Auditing Standards No. 1311-Inventory supervision disk

Finance and Accounting [2006] No. 4 2006-2-15 Ministry of Finance of the People's Republic of China

Chapter I General Provisions

Article 1 This standard is formulated in order to standardize the procedures for the inventory supervision of certified public accountants.

Article 2 This standard is applicable to auditing of financial statements performed by certified public accountants.

Article 3 The inventory supervision referred to in these Standards refers to a certified public accountant who observes the inventory of the audited unit's inventory on site, and conducts proper inspection of the inventory that has already been inventoryed.

Article 4 It is the responsibility of the management of the audited unit to regularly inventory the inventory and reasonably determine the quantity and condition of the inventory.

It is the responsibility of a certified public accountant to implement inventory supervision and obtain sufficient and appropriate audit evidence about the quantity and condition of inventory at the end of the period.

Chapter II Inventory Supervision Plan

Article 5 The certified public accountant shall, based on the characteristics of the audited unit's inventory, the inventory system and the effectiveness of the internal control of the inventory, on the basis of evaluating the inventory audit plan of the audited unit, prepare an inventory supervision plan and make a reasonable inventory supervision arrangement.

Article 6 In preparing the inventory supervision plan, the CPA should be able to implement the following measures,

(1) Understand the content and nature of the inventory, the importance of each inventory item, and the storage location;

(2) Understand the internal control related to inventory;

(3) Evaluating the risks and importance of material misstatement related to inventory;

(4) Inspecting the working papers of the inventory supervision of previous years;

(5) Consider on-site inspection of the storage place of the inventory, especially the inventory with large amount or special nature;

(6) Consider whether it is necessary to use the work of experts or the work of other certified public accountants;

(7) Review or discuss with the management its inventory plan.

Article 7 When reviewing or discussing with the management of their inventory counting plan, the CPA should consider the following main factors to evaluate whether they can reasonably determine the quantity and status of inventory:

(1) the timing of the inventory;

(2) determination of the scope and location of the inventory inventory;

(3) the division of labor and competence of the inventory personnel;

(4) Meetings and tasks prior to inventory;

(5) Sorting and arranging the inventory, distinguishing between damaged, obsolete, obsolete, defective and ownership that does not belong to the audited unit;

(6) measurement tools and methods of inventory;

(7) The method of determining the completion degree of the product in process;

(8) Inventory arrangements for inventory stored in external units;

(9) Control of cut-off of inventory receiving and sending;

(10) Control of inventory movement during the inventory period;

(11) Design, use and control of inventory forms;

(12) Summary of inventory results and analysis, investigation and processing of inventory gains or losses.

Article 8 The certified public accountant shall evaluate whether the inventory time is reasonable based on the effectiveness of the inventory inventory system of the audited unit and related internal controls.

Article 9 If the inventory counting plan of the audited unit is considered to be defective, the certified public accountant shall request the audited unit to make adjustments.

Article 10 The inventory supervision plan shall include the following main contents:

(1) the target, scope and time schedule of the inventory supervision order;

(2) Main points and concerns of inventory supervision;

(3) the division of labor of personnel participating in the inventory supervision;

(4) Examine the scope of inventory.

Chapter III Inventory Supervision Procedures

Article 11 Before the audited entity counts the inventory, the CPA should observe the inventory site to determine whether the inventory that should be included in the inventory range has been properly arranged and arranged, and attached with an inventory logo to prevent omissions or repeated inventory.

For inventories that are not included in the inventory, the CPA should find out why they are not included.

Article 12 For inventories in which the ownership does not belong to the audited entity, the CPA should obtain relevant specifications and quantities, and determine whether these inventories have been separately stored, marked, and not included in the scope of inventory.

Article 13 The certified public accountant shall observe whether the inventory personnel of the audited unit comply with the inventory plan and accurately record the quantity and status of the inventory.

Article 14 The certified public accountant shall conduct an appropriate inspection of the inventory that has been taken, check the results of the inspection with the inventory records of the audited unit, and form corresponding records.

Article 15 When checking the inventory that has been counted, the certified public accountant shall select items from the inventory count records to track to the physical inventory to test the accuracy of the inventory records; the certified public accountant shall also select items from the physical inventory to trace to the inventory count records To test the completeness of inventory count records.

Article 16 If a discrepancy is found during the inspection, the certified public accountant shall find out the cause and promptly ask the audited unit to correct it. If the difference is large, the certified public accountant should expand the scope of inspection or request the audited unit to take stock again.

Article 17 The certified public accountant shall pay special attention to the movement of inventory to prevent omissions or repeated counts.

Article 18 The CPA should pay special attention to the status of the inventory and observe whether the audited entity has properly distinguished all damaged, obsolete, obsolete and defective inventory.

Article 19 The certified public accountant shall obtain vouchers for the receipt, receipt, and movement of inventory before and after the inventory date, and check whether the inventory records and the end of the accounting records are correct at the end of the period.

Article 20 Before the inventory of the audited unit is completed, the CPA shall implement the following audit procedures:

(1) Observe the inventory site again to determine whether all the inventory that should be included in the inventory scope has been inventoryed;

(2) Obtain and check the number records of filled, obsolete and unused inventory forms, determine whether they are consecutively numbered, find out whether the issued forms have been recovered, and check with the summary records of inventory inventory.

Article 21 The certified public accountant shall review the summary records of the inventory results and evaluate whether they correctly reflect the actual inventory results.

Article 22 If the inventory inventory date is not the balance sheet date, the certified public accountant shall implement appropriate audit procedures to determine whether the changes in inventory between the inventory date and the balance sheet date have been properly recorded.

Article 23 Under the perpetual inventory system, if there is a significant difference between the perpetual inventory records and the results of the inventory inventory, the CPA should implement additional audit procedures to find out the reasons and check whether the perpetual inventory records have been properly made Adjustment.

Article 24 If the auditing method and the results of the audited unit are deemed invalid, the certified public accountant shall request the audited unit to conduct a new inventory.

Chapter IV Handling of Special Situations

Article 25 If the inventory supervision cannot be implemented due to the nature or location of the audited unit's inventory, the CPA should consider whether to implement alternative audit procedures and appropriate audit evidence.

The alternative audit procedures implemented by CPAs include:

(1) Checking the purchase transaction vouchers or production records and other relevant materials;

(2) Checking the vouchers for sales transactions that occur after the balance sheet date;

(3) Letter to customers or suppliers.

Article 26 If, due to unforeseen factors, it is impossible to implement inventory supervision on a predetermined date or accept the commissioning of the end-of-year inventory inventory of the audited unit when the commission is accepted, the certified public accountant shall evaluate the effectiveness of the internal control related to the inventory. Carry out appropriate inspections or ask the audited unit to re-inventory at another date; at the same time, test the inventory transactions that occurred during the period to obtain sufficient and appropriate audit evidence about the inventory quantity and condition at the end of the period.

Article 27 The certified public accountant shall send a letter of verification to the custodian or creditor for the inventory that the audited unit has entrusted to other units to keep or has pledged. If the amount of such inventory accounts for a large proportion of current assets or total assets, the CPA should also consider implementing inventory supervision or using the work of other CPAs.

Article 28 When the first-time acceptance of an entrustment fails to implement the supervision of the inventory at the end of the previous period, and the inventory has a significant impact on the financial statements of the current period, if sufficient and appropriate audit evidence about the inventory balance at the end of the period has been obtained, registration Accountants should implement one or more of the following audit procedures to obtain sufficient and appropriate audit evidence about the inventory balance at the beginning of the period:

(1) consulting the working papers of the former CPA;

(2) Reviewing inventory records and documents of the previous period;

(3) Checking the inventory transaction records of the previous period;

(4) Analysis using the gross profit percentage method.

Chapter V Impact of Inventory Supervision Results on Audit Reports

Article 29 A certified public accountant shall, based on the audit evidence it has obtained, form an audit conclusion on the quantity and condition of the inventory at the end of the period, and determine the impact on the audit report.

Article 30 If the inventory supervision cannot be implemented and the alternative auditing procedures cannot be implemented to obtain sufficient and appropriate audit evidence about the quantity and status of the inventory at the end of the period, the certified public accountant should consider issuing an audit report with a qualified opinion or an opinion that cannot be expressed.

Article 31 If a material misstatement is found in the financial statements of the audited entity through the implementation of inventory supervision, and the audited entity refuses to adjust, the certified public accountant should consider issuing an audit report with qualified or negative opinions.

Article 32 If a commission is accepted for the first time, and after implementing the audit procedures in accordance with Article 28 of these Standards, and still fail to obtain sufficient and appropriate audit evidence about the inventory balance at the beginning of the current period, the certified public accountant shall consider issuing a qualified opinion Or an audit report that cannot be expressed.

Chapter VI Supplementary Provisions

Article 33 These Guidelines shall be implemented as of January 1, 2007.