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Good day Sir,
Need help with this audit risk question and response.
” As the level of production has increase , the company has expanded the number of warehouses it uses to store inventory. It now utilises 15 warehouses; some are owned by the company and some rented from third parties. There will be inventory counts in all taking place in all 15 sites at the year end”
In my opinion i have identify the risk of overstatement on the value of inventory in the financial statements, how would the auditor response to this risk.thanks
Could also be understatement.
It depends how the audit of the inventory was planned and carried out. Or is the 3Rd party warehouses had any other companies stock that could have been misallocated to your company.
Risk of both under and over valuation, risk of control procedures as well
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