Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › full inventory count before yr end
- This topic has 1 reply, 2 voices, and was last updated 2 years ago by Kim Smith.
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- July 5, 2021 at 6:22 am #626988
Dear Professor,
“Inventory is held in five warehouses and on 28 and 29 December a full inventory count will be held with adjustments for movements to the year?end. This is due to a lack of available staff on 31 December. ”
Audit Risk: “Due to staff inavailability, the company is planning to undertake a full year?end inventory count days before the year? end and then adjust for movements to the year?end.
The adjustments may not be made accurately or completely.”Professor, am unable to understand how this is an audit risk. And moreover how will this really be carried out?
Thanks much always:)
July 5, 2021 at 6:38 pm #627031Imagine – just one stock line:
Quantity counted in warehouse 1 on 28th is 500
On 29th – 300 more units are received in
On 30th – 200 units are sold.
“Roll-forward” quantity should therefore be 600.Not only are there potentially 00s or even 000s of movements to track in/out – but what if some movements are transfers between warehouses (!)
The “roll-forward” has therefore to be documented (and audited) in detail – e.g. quantities in per GRNs to purchase invoices and quantities out to sales invoices.
This is essentially an exacerbated cut-off risk.
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