i. The amounts involved are invariably material.
ii. Stock has a one for one impact on the reported profits i.e. an increase in stock increase the reported profit. It is therefore open to distortion by management.
iii. Stock does not derive from the normal double entry system; it is arrived at by stock taking carried out at the year-end.
iv. Stocks are portable and valuable opening themselves to pilferage and deterioration either intentional or accidental.
v. The number of items involved is usually numerous creating verification problems as far as existence and condition is concerned.
vi. Although stocks are valued at the lower of cost and net realizable value, what constitutes cast can vary from one management to another and the basis of determining that cost can be subject to so many different methods all resulting in different values for the same items.
vii. it is an area that is susceptible to manipulation by management provision for obsolescence, slow moving and damaged stocks is a question of judgment therefore it is easy for the auditor to disagree with management.
viii. stock is normally made up of different items e.g. work in progress, raw materials all these can be valued on a different basis and amalgamated and described as stocks.
ix. Stock may be overstated by inclusion of goods sold but not dispatched to customers.
Wilfykil answered the question on April 12, 2019 at 06:17
- Discuss on verification of Cash in hand and Cash in bank during auditing(Solved)
Discuss on verification of Cash in hand and Cash in bank during auditing
Date posted: April 12, 2019. Answers (1)
- Discuss Verification of non-current assets during auditing(Solved)
Discuss Verification of non-current assets during auditing
Date posted: April 12, 2019. Answers (1)
- List the Audit tests for salaries and wages(Solved)
List the Audit tests for salaries and wages
Date posted: April 12, 2019. Answers (1)
- Define Vouching Audit and it's usage(Solved)
Define Vouching Audit and it's usage
Date posted: April 12, 2019. Answers (1)
- Which balance sheet ratios are usually considered during auditing?(Solved)
Which balance sheet ratios are usually considered during auditing?
Date posted: April 12, 2019. Answers (1)
- Define the term Cut-off tests(Solved)
Define the term Cut-off tests
Date posted: April 12, 2019. Answers (1)
- Which are the disadvantages of monetary unit sampling?(Solved)
Which are the disadvantages of monetary unit sampling?
Date posted: April 12, 2019. Answers (1)
- State and explain audit Sampling methods(Solved)
State and explain audit Sampling methods
Date posted: April 12, 2019. Answers (1)
- Which are the qualities of a good audit sample?(Solved)
Which are the qualities of a good audit sample?
Date posted: April 11, 2019. Answers (1)
- Which are the factors considered before adopting statistical sampling?(Solved)
Which are the factors considered before adopting statistical sampling?
Date posted: April 11, 2019. Answers (1)
- Which are the disadvantages of statistical sampling?(Solved)
Which are the disadvantages of statistical sampling?
Date posted: April 11, 2019. Answers (1)
- Which are the advantages of statistical sampling?(Solved)
Which are the advantages of statistical sampling?
Date posted: April 11, 2019. Answers (1)
- Give the disadvantages of judgmental sampling(Solved)
Give the disadvantages of judgmental sampling
Date posted: April 11, 2019. Answers (1)
- Give advantages of judgmental sampling(Solved)
Give advantages of judgmental sampling
Date posted: April 11, 2019. Answers (1)
- Which are the Main approaches to audit sampling?(Solved)
Which are the Main approaches to audit sampling?
Date posted: April 11, 2019. Answers (1)
- Which are the stages in audit sampling?(Solved)
Which are the stages in audit sampling?
Date posted: April 11, 2019. Answers (1)
- Give cases where sampling is inappropriate(Solved)
Give cases where sampling is inappropriate
Date posted: April 11, 2019. Answers (1)
- Give the reasons for audit sampling(Solved)
Give the reasons for audit sampling
Date posted: April 11, 2019. Answers (1)
- What does the process of performing analytical procedures consist of?(Solved)
What does the process of performing analytical procedures consist of?
Date posted: April 11, 2019. Answers (1)
- Which are the methods of obtaining audit evidence?(Solved)
Which are the methods of obtaining audit evidence?
Date posted: April 11, 2019. Answers (1)