Stocktake Is Important For Audit.

1. Issue

Client did not perform the stock take, as an auditor how do you will verify the existence of the stock at the year’s end?

Conclusion

i) To perform alternative audit procedures and obtain sufficient and appropriate audit evidence regarding the existence and condition of inventory.

ii) We shall modify our opinion in the auditor’s report if we are unable to perform alternative audit procedures to obtain sufficient appropriate audit evidence.

2. Reason

i) As referred to ISA 501, auditor shall obtain sufficient appropriate audit evidence regarding the existence and condition of inventory by attendance at physical inventory counting if the inventory is material to the financial statements.

ii) If unable to attend the physical inventory count, auditor shall make or observe the physical count on an alternative date, the changes in inventory between the count date and the date of the financial statements to be properly recorded or reconciled.

iii) If the attendance at physical inventory counting is impracticable, auditor shall perform alternative audit procedures to obtain sufficient appropriate audit evidence regarding the existence and condition of inventory. If not possible to do so, auditor shall modify the opinion in the auditor’s report in accordance with ISA 705 – Modifications to the Opinion in the Independent Auditor’s Report.

iv) If the inventory is under the custody and control of a third party, auditor shall obtain sufficient appropriate audit evidence by requesting confirmation from the third party or perform inspection or other audit procedures appropriate in the circumstances.

3. Supporting

i) ISA 501 - Audit Evidence – Specific Considerations for Selected Items

ii) ISA 705 – Modifications to the Opinion in the Independent Auditor’s Report

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