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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
Thread Title: Physical verification of Inventory by Internal Auditor
Created On Monday January 02, 2012 4:12 AM
  Physical verification of Inventory by Internal Auditor
  Physical verification of Inventory by Internal Auditor
  Physical verification of Inventory by Internal Auditor


makiia


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Monday January 02, 2012 4:12 AM

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Dear All
What will be the responsibility of internal auditor with regard to physical verification of inventory performed by the company?

The company performs monthly/quarterly/annual physical verification of inventory. Should the internal auditor participate in the inventory verification team, verify the inventory or should he cross verify the inventory taken by the concerned department on random basis (as done by external auditor).

Thankyou




Edited: Monday January 02, 2012 at 5:29 AM by makiia

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jbmanian


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Friday January 13, 2012 1:30 AM

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Inventory is owned by stores/Supply Chain Management which can only be verified by Internal Auditor for his review purpose, if Audit Plan covers the same.

If IA is used for cross verification of process owners responsibilities, it is undermining the scope of IA.


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Micheal


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Friday January 13, 2012 9:30 AM

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As an "end result" test, re-performing a physical count on a sample of locations I believe would be appropriate. If this is the objective of the inventory verification team then my answer would be yes to participating with them.

Don't forget the verify the controls surrounding the process that can be overlooked depending on the objective (e.g. overvaluing inventory or revenue recognition).
For example:
If the counts are entered into a spreadsheet verify the formulas.
If the facility is using a Warehouse Management System (WMS) to perform counts, verify inventory location queries is not assessable during the count. I have overheard staff say they performed a query and enter the query amount in instead of performing a physical one. You may want to go so far as to have a log generated of inventory queries made.
Verify all items not included in count are allocated to a customer for shipment or delivery. (i.e. if it is on a trailer, it should be sealed and a BOL prepared and ready)

I hope I answered your question. Sorry if I hit you with TMI, I worked in the supply chain field for years and know some of the potential loop holes.

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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
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