- This topic has 1 reply, 2 voices, and was last updated 11 years ago by
.
- Posts
Question requirement : state 3 substantive procedures regarding Valuation of year ended inventory
Is my answer right or wrong
“Obtain the written representation from management to confirm that they valued inventory as per IAS-2″
” Compare Gross margin for current year with prior years.Fluctuations in Gross margin could be due to inventory valuation issues. Discuss any significant variances with the management.”
” Compare Inventory Days for current year with prior years and identify any significant fluctuations.”
Written representation: ok, but representations are weak evidence. Stronger evidence is available from tracing to purchase invoices.
Inventory days: might be better to say you would look for increases in particular as this might indicate difficult to sell stock (that might need to be written down.
Overall fine, I think.
- You must be logged in to reply to this topic.