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Does attending inventory count to ensure the quantity taken for valuation is correct be regarded as a substantive procedure carried out of for verifying value of inventory?
Substantive procedures or testing is performance of of audit procedures on account balances .Attending inventory count is a correct inventory procedure but not substantive testing .You may want to attend the inventory count to observe how the staff do it in order to ascertain that it is consistent with the company’s inventory counting procedures/policy .An example of substantive testing is scrutinising sales made immediately after year end.In order to ascertain that inventory is valued at the lower of cost or net realisable value.Maybe the inventory was sold at lower than its purchase price and valuing it at cost means that the inventory figure in SOFP is overstated .
I dont think what u said is correct .attending inv count is a substantive procedure carried out to establish the existence assertion of inventory, this is listed in bpp text.r u the one who is supposed to be answering my qs or r u answering on kens behalf
Attending inventory counts is very much a substantive procedure. It particularly addresses the assertions of existence and completeness. By looking at the state of the inventory it can also address some aspects of valuation.
To really attack valuation you have to trace the value of some items to the purchase invoices. You also have to ensure that the inventory is still selling OK, in case it has to be written down to NRV.
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