Know How An Auditor Verify The Business Stock Linked With Any Case Laws
For a huge business company, there can be situations when some of the business stock get stuck in a case. However, while preparing for an audit, the Auditor must check with these items.
- He must prepare the auditing report after ensuring whether the company’s accounts are in compliance with the books. Further, in accordance with the Company Act, he should list the closing stock under various head asset sections like
- The Stores and Spare parts
- Loose tools
- Working status
- Moreover, the CARO advocates the corresponding management officials to conduct the physical verification process almost at regular periods for the finished goods, their respective storage department, the available spare parts sections and other raw materials. This is considered as the primary evaluation process which is later confirmed by the Auditor using his test check method or even by observation techniques to see if the stock-sheets are prepared properly with the true quantity records.
- Additionally, the Auditor must check this out if the organization maintains the actual books of accounts that is entitled only for goods sales and purchase category.
- However, if the company fails to register the details of the purchasing and selling accounts of assets and also, the yearly stock-taking statements and physical counts is not done at the winding up session, then the Auditor shall be held liable if he does not document this in his report.
- Also, the Auditor must be in a position to identify the management steps regarding the valuation of physical inventory items. He can cross-check this with the manual stock sheets or else, he can conduct the procedure of sample checks of company items in his presence.
- The Auditor should definitely make note if the stocks were adjusted for any shortage of excess of products being handled.
- For all those stocks that are not under the direct concern of the firm, the Auditor must get corresponding confirmation letter sheets from those agents or parties holding these. This may include those stocks like assets sent for processing or the goods on consignment and so on.
- In case any property lies within the shareholder’s storeroom, it is the duty of management to take note and verify the stocks. The Auditor only has to assure if the stocks as per the date on the balance sheet exists after viewing the relevant documents with respect to this subject.