Month: December 2021

1. Clause 4(ii)(a) requires the auditor to comment whether the management has conducted physical verification of inventory at reasonable intervals. According to Accounting Standard (AS) 2, “Valuation of Inventories”: “Inventories are assets: held for sale in the ordinary course of Read More …

The auditor may involve a technical expert in verification of work-in-progress if necessary. He may advise his client that where possible the work-in-progress should be reduced to the minimum before the closing date, particularly of items the production of which Read More …

In addition to the audit procedures discussed above, the following analytical review procedures may often be helpful as a means of obtaining audit evidence regarding the various assertions relating to inventories : reconciliation of quantities of opening stocks, purchases, production, Read More …

The auditor’s objective concerning valuation is to obtain evidence that the amount at which inventories have been valued is computed on an appropriate basis. The auditor should satisfy himself that the valuation of inventories is in accordance with the normally Read More …

Where significant stocks of the entity are held by third parties, the auditor should examine that the third parties are not such with whom it is not proper that the stocks of the entity are held. The auditor should also Read More …

Physical verification of inventories is the responsibility of the management of the entity. However, where the inventories are material and the auditor is placing reliance upon the physical count by the management, it may be appropriate for the auditor to Read More …

The responsibility for properly determining the quantity and value of inventories rests with the management of the entity. It is therefore the responsibility of the management of the entity to ensure that the inventories included in the financial information are Read More …

Stock-in-Trade The valuation of stock is frequently the main factor in determining the result shown by the accounts. Apart from the effect on the Balance Sheet, incorrect treatment of stock would affect the profits of the year that has closed Read More …

For verification of this item it would be essential to refer to agreement with Railway for availing of the facility. All expenses connected with the laying of the rails and making individual agreements, the amount paid to the Railway, if Read More …

Expenses when incurred for the development of any property and which cannot be conveniently added to the value of such property should be capitalized under this head and written off over the period during which the benefit from such development Read More …