F8 aa (int)session37 j08

Test for omission and other understatement in the accounting records of sales charged to accounts receivable, by selecting from appropriate records of potential sales transactions1and tr

OVERVIEW

Objective

¾ To illustrate the contents of work programs for the audit of transactions and balances

TRANSACTIONS – Statement of comprehensive income BALANCES – Statement of financial position

(Audit senior in charge)

AUDIT AREA – CREDIT PURCHASES REVIEWED BY DATE

(Manager)

The purpose of the auditing procedures set out in this section of the program is to obtain

reasonable assurance that credit sales are not materially understated

Work performed

by

Ref to supporting working paper

RELIANCE ON INTERNAL CONTROL PROCEDURES

1 Where we have placed reliance on the client’s internal control procedures, test that the

controls on which we are relying have been complied with, and record the details of such

tests in the working papers

TESTS OF DETAIL

Note: Where the maximum values of items in an account can be determined from independent

information or by calculation, use analytical procedures to reduce tests of detail as far as

possible

2 Test for omission and other understatement in the accounting records of sales charged to

accounts receivable, by selecting from appropriate records of potential sales transactions1

and tracing the selected items through to the relevant income account in the general

ledger, as follows:

(A) Select from the most appropriate records the items to be examined (see note

below) Test for completeness of these records by examining the system for

preparing and controlling such records, by testing the numerical sequence (if any)

of the records, and/or by any other procedures which are appropriate

Note: The records from which the sample is selected should as far as possible

satisfy the following requirements:

(1) The records should if practicable be independent of the sales recording system

(2) The records should be complete in the sense that for each sale that has been

made, there is a related item in the independent records

(3) The records should if practicable be such that the probability of selecting a

particular item is proportionate to the value of the potential sale

(4) The records should enable the potential sales to be identified at the earliest

possible stage in the recording process

(B) Compare the records selected in procedure (A) above with the initial sales records,

for correct quantities

(C) Check the selling price of these initial sales records with the relevant independent

records (such as official catalogues, price lists, etc.), and check the extensions and

casts

(D) Check the VAT on sales selected for testing, and test the proper recording of these

items in the VAT account in the general ledger

(E) Compare these initial sales records with the intermediate and final records, testing

these records for understatement of the casts, and for under-summarisation of the

sales income

(F) Compare the credits in the final records examined in procedure (E) above with the

relevant income account(s) in the general ledger

(G) Test the casts of these income accounts and prove the final balances

arithmetically

3 Test the transactions in the last few days of the year to ensure that sales have not been

understated as follows:

Compare major despatches as shown in the despatch records in the last few days of the

year with the copy sales invoices Trace these copy invoices, via the sales accounting

records, to the credit of the sales account In doing this, ensure that these despatches

have been included as sales in the year under review

Note: This test should be carried out in conjunction with the cutoff procedures relating

to the overstatement of receivables – see paragraph 10 of the AP 2 for receivables and

prepayments

2 AP = Audit Program

(Audit senior in charge)

AUDIT AREA – CREDIT PURCHASES REVIEWED BY DATE

(Manager)

The purpose of the auditing procedures set out in this section of the program is to obtain

reasonable assurance that purchases are not materially overstated

Work performed

by

Ref to supporting working paper

RELIANCE ON INTERNAL CONTROL PROCEDURES

1 Where we have placed reliance on the client’s internal control procedures, test that the

controls on which we are relying have been complied with, and record the details of such

tests in the working papers

TESTS OF DETAIL

2 Select from the general ledger accounts items to be tested for overstatement

(A) Examine the initial purchase records and supporting documents (such as purchase

orders and goods received records) for:

(1) Approval,

(2) Other independent evidence of validity, and

(3) Correctness of the allocations to the general ledger accounts

(B) Cast the initial purchase record (usually the purchase invoice)

(C) Examine the terms of sale of suppliers selected for the above tests, and identify

those suppliers that have included reservation of title in their terms of trade The

end of the reporting period liability to these suppliers should be tested for

understatement (see paragraph 21 (A) of the AP for payables, accrued expenses

and provisions)

Note: Where credit entries (e.g purchase credits and cash discounts) have been

identified in taking out our debit sample, ensure that these credit entries are being tested

for understatement using the relevant AP

(D) Examine also the relevant paid cheques for the correctness of the relevant details

(such as the date, the payee, the amount and the signatures), and investigate any

alterations or unusual endorsements

(E) Where any selected debit entries have not been paid by the end of the reporting

period, ensure that these are included in payables at that date

(F) List on a working paper the names of the suppliers whose transactions have been

tested These suppliers will form part of the payables confirmation sample (see

paragraph 3(B) of the AP for payables and accrued expenses)

3 Test the transactions in the last few days of the year to ensure that purchases have not

been overstated, as follows:

Compare major purchases as shown in the purchases account in the last few days of the

year with the receiving records, to ensure that the goods or services were received or

performed before the end of the reporting period

Note: This test should be carried out in conjunction with the cutoff procedures relating

to the understatement of liabilities – see paragraphs 16 and 17 of the AP for payables,

3 WAGES AND SALARIES

HASTINGS & WARWICK

Sch Ref.

CLIENT PREPARED BY DATE PERIOD REVIEWED BY DATE

(Audit senior in charge)

AUDIT AREA – WAGES AND SALARIES REVIEWED BY DATE

(Manager)

The purpose of the auditing procedures set out in this section of the program is to obtain

reasonable assurance that wages and salaries are not materially overstated This section

can be duplicated to support any number of separate payrolls

Work performed

by

Ref to supporting working paper

RELIANCE ON INTERNAL CONTROL PROCEDURES

1 Where we have placed reliance on the client’s internal control procedures, test that the

controls on which we are relying have been complied with, and record the details of such

tests in the working papers

(i) Where we have evaluated the internal control over wages and salaries as good

(ii) Where we have obtained satisfactory results from our analytical review for

credibility

(iii) Where we have reviewed the week by week/month by month payroll data, which

is reconciled by management or is closely controlled by management budgets,

and have received satisfactory explanations for all significant discrepancies

revealed by our review

(A) (i) From the general ledger payroll accounts select (on the basis of the total debit

entries in these accounts) the accounts to be sampled

Note: If a costing system is used it may be necessary to select directly from

payroll records and prove the postings to the general ledger in total

(ii) From each payroll account selected under procedure (i) above select individual

payrolls to be examined, testing the casts of the debit entries in these accounts

for overstatement

(iii) From each payroll selected under procedure (ii) above select individual

employees’ pay to be examined, testing the casts of the payroll for

overstatement

(B) Where we can use the payroll reconciliation method, select three payrolls for

testing as follows:

(i) At the interim audit visit select two payrolls for testing – one a current payroll

and the other selected at random

(ii) At the final audit visit select a further payroll at random

(iii) Where we only carry out one audit visit select three payrolls from the year at

random

For each payroll selected under (i) to (iii) above select individual employees’ pay

to be examined using a reduced sampling interval

(C) In addition, we should select all individuals who prepare, handle or approve

employee status change documents, payroll master files or payrolls

3 Carry out the following procedures in respect of each employee selected for examination:

(A) Obtain evidence of employment by examining independent employee records, by

personal contact, or by enquiry of other independent employees

(B) Examine the relevant supporting documents (such as employee status change

documents, payroll master files, and employees’ time, piece and bonus records)

for:

(1) Approval

(2) Other independent evidence of validity and,

(3) Correctness of the gross pay calculations

(C) Obtain the payroll for the pay period from which the employee was selected, and

scrutinise it for possible duplicate payments to that employee

(D) Test that deductions from pay have been properly accounted for, as follows:

Note: Where the maximum rates of deductions from pay can be determined from

independent information or by calculation, use analytical procedures to reduce as

far as possible the tests of detail in 3(D)(i) below

(i) Test for understatement of credit entries in the deduction accounts in the

general ledger Use the sample of the employees checked under procedures (A)

to (C) above For each employee selected check that the various deductions

from gross pay have been correctly recorded in the initial, intermediate and

final records and in the general ledger deduction accounts Test for

undercasting of deductions in each of these records

(ii) In respect of the payrolls dealt with in 2, check that the total deductions plus the

total net pay equals the total gross pay

(E) For employees paid in cash, observe the making up of pay packets and the

distribution of pay to employees, paying special attention to unclaimed pay

When we, use the payroll selection reconciliation method we should attend the

payout of the current payroll week selected at the interim audit

(F) For employees paid by cheque, examine the paid cheque for the correctness of the

relevant details (such as the date, the payee, the amount and the signatures), and

investigate any alterations or unusual endorsements

4 Check the total net pay recorded on all the payrolls selected in 2 above to the paid cheque

or other payment details

5 Where we have used the payroll selection reconciliation method of selecting individuals

for testing, carry out the following additional procedures:

(A) For each employee selected review the cumulative pay for the year for amounts

over basic pay

(B) Cast the selected payrolls and compare the totals of gross pay and deductions of

the selected weeks or months with the equivalent totals of all other payrolls in the

year

(C) Cast all the weekly or monthly payroll summaries and agree the postings to the

general ledger

(D) Scan the general ledger payroll accounts to ensure that there are no payroll

postings which have not been checked under (C) above

4 PROPERTY, PLANT AND EQUIPMENT

HASTINGS & WARWICK

Sch Ref.

CLIENT PREPARED BY DATE PERIOD REVIEWED BY DATE

(Audit senior in charge)

AUDIT AREA – NON-CURRENT ASSETS REVIEWED BY DATE

(Manager)

The purpose of the auditing procedures set out in this section of the program is to obtain

reasonable assurance that property, plant and equipment are not materially overstated

Work performed

by

Ref to supporting working paper

RELIANCE ON INTERNAL CONTROL PROCEDURES

1 Where we have placed reliance on the client’s internal control procedures, test that the

controls on which we are relying have been complied with, and record the details of such

tests in the working papers

TESTS OF DETAIL

EXAMINING THE TRANSACTIONS DURING THE YEAR

2 Obtain or prepare working papers of non-current asset balances and a summary of the

related general ledger transactions (including depreciation) and test that these have been

properly prepared, as follows:

(A) Agree the totals with the general ledger accounts

(B) Test the casts for overstatement

(C) Agree the totals with the subsidiary records of property, plant and equipment (e.g

tangible fixed asset registers)

3 (A) Select the property, plant and equipment to be examined, as follows:

(1) Select from the list of non-current assets at cost at the beginning of the financial

year; and

(2) Select additions to non-current assets in the financial year by selecting from the

debit entries in the non-current asset control account in the general ledger Test

the casts of the debit entries in this account for overstatement

(B) Test the additions selected in procedure (A) (2) above with the relevant supporting

records and documents for:

(1) Approval by the board of directors or by other designated officials

(2) Other independent evidence of validity

(3) Correctness of the allocations to the general ledger accounts

(C) For the items selected in procedure (A) (2) above, examine the paid cheque for the

correctness of the relevant details

(D) For each item selected under procedures (A) (1) and (2) above:

(1) Where the asset has not been disposed of, check that it is correctly included in

the non-current asset control account at the end of the reporting period

(2) Where the non-current asset has been sold or otherwise disposed of during the

financial year, check with the supporting evidence (e.g correspondence,

scrapping note, etc.) and ensure that the profit or loss on disposal has been

properly computed and has been correctly recorded in the general ledger

accounts Determine that the client has made a reasonable scrap recovery in the

case of assets which have been scrapped

CONFIRMING THE EXISTENCE AND OWNERSHIP OF FIXED ASSETS

4 Confirm the existence and ownership of all property, plant and equipment which have

been examined under procedure 3(D) (1) above, as follows:

(A) In respect of freehold property, inspect the title deeds or obtain confirmation from

independent third-party custodians

(B) In respect of leasehold property, inspect the leases or obtain confirmation from

independent third-party custodians

(C) In respect of plant and equipment, review the evidence of physical counts, or

inspect the assets, or use other appropriate procedures If the asset is permanently

idle or obsolete, review the value of this asset in the accounts

CONFIRMING THE BOOK VALUE OF PROPERTY, PLANT AND EQUIPMENT

5 Test that depreciation has been correctly calculated, by applying either procedure (A) or

procedure (B) below:

(A) Prove the amount of depreciation in total

(B) Test the amounts of depreciation on individual items selected in procedure 3(A)

above, by checking with the authorised depreciation rates and by checking the

calculations in order to ensure that such items are not already fully depreciated

Also, test the casts of the depreciation records and the postings to the general

ledger accounts

6 Investigate and test the client’s procedure which ensures that all amounts expended by the

client on the acquisition of property, plant and equipment are correctly recorded as

non-current assets

Note: This procedure ensures that the test for understatement of the accumulated

provision for depreciation (in paragraph 5 above) is based on a population of property,

plant and equipment that is not materially understated

7 Ensure that depreciation:

(A) Has been provided on a basis which is consistent with that of the previous year

(B) Is adequate but not excessive, by reviewing gains and losses on disposals or by

other appropriate methods

PROPERTY VALUATION

8 (A) Review the details of any valuation of assets made in the year, whether or not such

valuations have been reflected in the accounts

(B) Where there is reason to believe that the current market value of a property could

be significantly different from the amount at which it is included in the accounts,

and no valuation has been made in the current year, discuss with the manager the

need to request the client to make such a valuation

(C) Assess whether or not a true and fair view is shown by the statement of financial

position if the current market value is materially below the book value and, if

appropriate, consult the manager or partner

REVIEWING AND TESTING CAPITAL COMMITMENTS

9 Obtain or prepare a working paper of capital commitments

10 Test that they are correctly stated

11 Consider possible additional commitments Discuss these with responsible client

officials and include in the working papers the date and outcome of the discussions and

the names and status of the officials concerned

(Audit senior in charge)

AUDIT AREA – INVENTORY REVIEWED BY DATE

(Manager)

The purpose of the auditing procedures set out in this section of the program is to obtain

reasonable assurance that inventories are not materially misstated

Work performed

by

Ref to supporting working paper

RELIANCE ON INTERNAL CONTROL PROCEDURES

1 Where we have placed reliance on the client’s internal control procedures, test that the

controls on which we are relying have been complied with, and record the details of such

tests in the working papers

TESTS OF DETAIL – EXISTENCE AND OWNERSHIP

Planning attendance at physical inventory counting

2 Where the date selected for the count is an interim date we must be able to rely on the

year-end book inventory records Assess the past reliability of the book records by

examining the materiality of differences disclosed by previous physical counts If there

are any doubts as to the reliability of the book records, discuss immediately with the

manager whether we should request the client to conduct a year-end count

3 Review the adequacy of the client’s instructions Any serious shortcomings must be

discussed immediately with responsible client officials so that they can be rectified before

the inventory count

4 Select for test counting (by reference to perpetual records or prior period inventory

summaries and purchases selected under the AP for income and expenses) those

inventory items expected to have the largest monetary value at the count date

5 Where the client maintains inventory of a technical nature which is not readily

identifiable, or whose conditions we are not competent to ascertain, consider using

independent experts

6 Obtain a list of all inventory held by third party custodians Ensure that the list is

complete In respect of these inventories:

(A) Establish the suitability of the custodian

(B) Confirm the existence and title of such inventory directly with the custodians

(C) Review the controls exercised by the client over these inventories (including

cutoff) and consider whether there is any need for us to inspect them

7 Arrange for the necessary audit staff to attend physical inventory counting at the various

locations Brief the audit staff and ensure that they have a copy of the client's instructions

together with a list of the inventory items pre-selected in 4 above and the audit program

for procedures during counting which they will need to complete

Make arrangements for the audit staff to be present at the end of the count

See end of this program

8 On completion of the count obtain and review the audit working papers prepared during

our attendance at the various locations, and summarise the adequacy and effectiveness of

the counts

Procedures subsequent to physical inventory counting

9 Obtain the client’s count records and test that they are complete and accurate, as follows:

(A) Test for completeness, by comparing the numerical sequence of count records

with the details recorded in our working papers at the time of the physical count

(B) Scrutinise the count records to ensure that they have not been altered subsequent

to our attendance at the physical count by comparing the records with details

recorded in our working papers at the time of the physical count (e.g

photocopies)

Testing continuous stockchecking procedures

10 Review the instructions issued and the procedures adopted by the client, in order to

determine whether such instructions and procedures are adequate Pay particular

attention to controls revealed on the ICQ for the inventory system where inventory is not

physically counted at the end of the reporting period

11 Arrange to attend at least one of the continuous stockchecks during the year Review

reports of inventory counting or the inventory records to ascertain the extent to which

inventories have been counted during the year, and also to determine (by reviewing any

differences disclosed) the accuracy of the inventory records In the light of this review,

determine the extent of the counting to be performed under 12 (A) and (B) below Test

that the differences disclosed by counting have been adjusted in the inventory records

12 Carry out audit tests as follows:

(A) Select from the inventory account at the end of the reporting period a sample of

inventory items, and check the quantities with the underlying inventory records

and the valuation of the items with supporting documents

(B) Count a number of items that are in inventory, and check these by comparing

them with the inventory account

13 Summarise on a working paper our findings on the adequacy and effectiveness of the

continuous counting procedures and on the reliability of the inventory records Also

indicate the approximate amount of the differences found during the year

Checking quantities on stocksheets

14 Test the casts of the stocksheets by:

(A) Casting the pages to which counted items have been traced and follow the totals

through to the inventory summary

(B) Casting the final inventory summary, selecting individual page totals and casting

them at the same time selecting items for examination in procedure 15(A)

Where inventories are subject to continuous counting, test that the list of inventory has been

properly extracted (by selecting from the list and comparing with the inventory records and

vice versa)

15 Test that the physical quantities shown on the final stocksheets are neither overstated nor

understated by performing the following procedures:

(A) Overstatement: Agree the details of those items selected in procedures 14 (B)

above with the client’s count records, to ensure that the stocksheets only

incorporate count records from physical inventory counting

(B) Understatement: Agree items which were counted by us, or in our presence, with

the final stocksheets

Testing the cutoff of inventory

(Note: The cutoff tests detailed below should be co-ordinated with the cutoff tests on

receivables, payables, sales and purchases.)

16 Test that there was a proper cutoff at the physical count date, as follows:

(A) Select from the goods received reports for a few days either side of the

inventory-taking date, and compare with the relevant inventory records (and vice versa) to

ensure that goods received were recorded in the inventory records in the correct

accounting period

(B) Select from despatch records for a few days either side of the count date, and

compare with the relevant inventory records (and vice versa) to ensure goods

despatched were recorded in inventory records in the correct accounting period

(C) Where necessary, test the cutoff on the internal movement of inventory

17 Where certain sections only of the inventory have been physically counted (other sections

being represented by book figures) check that a clean cutoff has been achieved between

the several sections (raw materials, supplies, work in progress, finished goods, etc)

Determine in this way that all movements of inventory into or out of the sections

physically counted have been properly recorded Where appropriate, test that the cutoff

at the end of the reporting period between the various sections of inventory was adequate

18 Where the client’s count did not take place at the end of the reporting period, test that the

inventory records at that date reflected a correct cutoff regarding receipts and issues of

inventory In doing this, use the cutoff samples tested in the following:

AP for income and expenses – credit sales (paragraph 3)

– purchases on credit (paragraph 3)

AP for payables, accrued expenses and provisions (paragraph 8)

AP for receivables and prepayments (paragraph 9)

VALUATION

Checking valuations and calculations on stocksheets

19 Record in the working papers in detail the bases and methods of costing used, and obtain

reasonable assurance that these bases and methods are being applied consistently, and are

in accordance with generally accepted accounting practices and the stated accounting

policies of the company

20 Test the items selected in procedure 15 above as follows:

(A) Prove the unit costs on the stocksheets by reference to supporting records (e.g

suppliers’ invoices, labour cost analyses, overhead allocations etc)

(B) Prove the extensions on the stocksheets

21 Where the costs have been obtained from standard cost records, review the variance

reports or the entries in the variance accounts to determine whether or not the standard

costs are materially different from actual costs If there are material differences, ascertain

the reasons for them and consider the need to adjust the inventory valuation

22 Examine the overheads included in the inventory valuation and ensure that:

(A) Their inclusion is in accordance with generally accepted accounting principles

(B) They reflect the client’s normal level of activity

23 Ensure that inter-department or inter-branch profit included in inventory has been

properly eliminated and that any goods purchased or transferred from group companies

have been so identified and segregated on the inventory summary

24 Check that the general ledger accounts have been adjusted to reflect the results of

physical count Establish the reasons for any material differences disclosed

TESTING THE NET REALISABLE VALUE OF INVENTORY

25 Apply the procedures set out in (A) to (E) below to ascertain whether or not inventory

write-downs and provisions are adequate (but not excessive) so that inventories are stated

at the lower of cost and net realisable value In doing this, consider the following factors

where applicable: the condition of the inventory, its saleability, the possibility of

obsolescence, the levels of inventory in relation to current and expected sales or usage,

the estimated costs of completing work in progress, and current and expected selling

prices less reasonable costs of disposal

(A) Test the amount at which inventory of finished products and of other items held

for sale to customers is stated does not exceed the selling price less reasonable

costs of disposal Also test that the quantities held are not excessive Compare

inventory levels (where appropriate) with sales for the current year, with orders,

and with sales forecasts

(B) Test that work in progress is current and saleable Also test that (where

appropriate) it has been written down by the amount of any losses expected to

arise on realisation – taking into account reasonable costs of completion and

disposal

(C) Test that inventories of raw material and supplies which are defective, obsolete or

surplus to production requirements have been adequately written down

(D) Test that adequate provision has been made for any major purchase commitments

which are surplus to requirements or which are at prices in excess of current

replacement prices

FOLLOWING UP AN INTERIM COUNT

26 Where the physical inventory count date differs from the end of the reporting period

examine all significant entries in the general ledger inventory control account, as follows:

(A) Test debits for overstatement by selecting from debits to general ledger inventory

accounts and agree with the underlying records

(B) Test credits to the inventory account for understatement by comparing with the

appropriate debits to cost of sales

(C) Test credits to the inventory account for misstatement by reviewing analytically

the expected cost of sales (e.g by reference to sales and gross profit margins) and

comparing this amount with the inventory credits

These steps should be co- ordinated with related procedures for payables, cost of sales and receivables

27 Test cost of sales for overstatement by completing the AP for Income and Expenses

28 Confirm that there has been no material change in the relationship of inventory cost to net

realisable value between the count date and the end of the reporting period

TESTING GOODS IN TRANSIT

29 In respect of goods in transit:

(A) Examine the basis for recording any inventory that is in transit

(B) Check that the goods have been subsequently received and were validly in transit

Goods in transit will be tested for understatement in conjunction with the cutoff tests

under steps 16 to 18 in this program and cutoff tests in the AP for Payables, accrued

expenses and provisions

OVERALL REVIEW

30 Compare the inventories at the end of the reporting period with those of the previous

year, and obtain explanations for any significant differences Compare inventory

turnover rates with those of previous years Generally consider whether inventories are

stated on appropriate bases consistent with those stated in the preceding year

PROCEDURES DURING PHYSICAL INVENTORY COUNT

1 Before carrying out the procedures set out below, ensure that you are familiar with and

understand, the client’s procedures and instructions

ISA 501

2 At the outset, tour the areas for which you are responsible to ascertain the nature,

location and size of the inventory to be counted

3 By observing the procedures being carried out, obtain reasonable assurance that the

instructions are being complied with and that the procedures followed are adequate to

ensure an accurate count Bring any significant breakdown in procedures to the

attention of the senior auditor in charge and the client official in charge of physical

inventory counting

4 Make the following test counts, and record sufficient details in the working papers so

that the selected items can be traced to the final inventory summary (Indicate on the

working papers that all test counts have been agreed to final client counts):

(A) All items pre-selected in step 4 of the main program (To test inventory for

overstatement and understatement.)

(B) A sample of items selected from the physical inventory items (To test inventory

for understatement.)

(C) A sample of items selected from the client’s count records, or in the case of

continuous inventory checking, from the inventory records (To test inventory for

overstatement.)

For (B) and (C) pay particular attention to high value items

5 Ensure against subsequent alteration of the client’s count figures by, for example, taking

photocopies of the stocksheets and recording the numbers of sheets utilised

6 During the course of the count make and record such tests as are necessary to ensure that:

(A) All differences disclosed by double counts are investigated and resolved

(B) All inventory is included in the physical count and all areas are systematically

cleared

(C) Any goods that are sub-standard, defective, obsolete, or slow-moving are identified

and recorded as such on the stocksheets

7 Check that all goods which do not belong to the client are properly identified and

segregated, and that they are not included in count records

8 (A) Observe the procedures for dealing with goods received or despatched during the

count Record on an audit working paper the details of a number of such items to

enable subsequent checking of purchases-inventory and inventory-sales cutoff

(e.g the serial numbers of the last goods despatched note(s) for each location,

checking previous and subsequent sequences)

(B) Observe the control over the movement of goods between areas whilst counting

is in progress

9 Examine the serial numbering or count records and record details of all records used

10 Where work in progress is being inspected during the count, ensure that adequate

information is available relating to the degree of completion

11 Where inventory is stored in bulk and cannot be measured accurately, attend with

suitably experienced client personnel Record and assess the effectiveness of the

methods used for inspecting and estimating such inventory

12 Prepare a summary of the adequacy and effectiveness of the count procedures