[jrd56202]

So I’m starting my job next month at a top 10 national firm. I had lunch with my “buddy” and found out I will be having to do inventory observations around December. I assumed someone would come with me to show me the ropes during my first one. Turns out I’ll be on my own. Can anyone give me any insight or tips for this. I know they obviously can’t be very hard if they’re going to send a first year staff out to do them alone, but I’m nervous as heck about it already.

BEC-72
AUD-71, Retake 8/28/14, 85!
FAR-64
REG-72

[Smashbox20]

There's nothing to it. You should have at least learned the basics of an inventory Obs. while studying for audit.

You will pick a random sample of about 25 items from their count detail and go out on the floor and recount the items (vouching: sheet to floor)

Then you will go out on the floor, pick 25 random items, count them, and then ensure that the count detail reconcile (Tracing: floor to sheet)

You have now performed an inventory obs. You're going to have a blast, make sure to wear comfortable shoes.

FAR: Passed
REG: Passed
BEC: Passed
AUD: Passed

[Mayo]

Tips:

-if you have a checklist or a list of questions to ask…I would type and print out separately from your form. It's easy to miss a question or two while talking to the client.

-sit down with the client contact and explain your procedures (your count, what areas of counting, etc). I there is a third party counter (common in retail) then make sure you understand their role. If they are the ones who submit the final report then their supervisor can't leave before you're done your count and finalize everything.

-don't leave before getting the final inventory….don't leave before getting the final invetory….don't leave before getting the final inventory.

-doesn't matter how long it takes…don't feel pressured to rush just because it's late. If it takes all day it takes all day. I had a count once which had lasted eight hours. On the final floor to sheet count I found an exception in raw materials and expanded. Found more exceptions in raw materials. Ended up that it took two and a half additional hours to figure out they weren't properly counting any of their raw materials. I remember the client saying something like, “Cab't you just pick another one or something (referring to the last item)?” Haha, nope.

-If you have spare time while they count, I'd recommend using it to document your work. Makes the time go by faster and keeps you productive

-Keep your phone charged in case you need to call your senior.

Mayo, BBA, Macc

[silvercamaro77]

Another tip is that when you call to schedule ask what you should wear. Depending on where you are, sometimes you have to have steel toed shoes, etc.

Also, when you start counting, make sure you check with the client to make sure you're recording information that will be on the final inventory listing. Sometimes there are multiple identifying numbers on each item of inventory but only one of those will show on the final listing.

AUD- 95
FAR- 75
BEC- 83
REG- 85

Officially done! Exclusively used NINJA for BEC, REG, and FAR

[Smashbox20]

@silvercamaro bring up a really good point. If the only identifier you have for a particulat item won't appear on the final inventory listing, it would be quite difficult to reperform your work down the road.

FAR: Passed
REG: Passed
BEC: Passed
AUD: Passed

[Smashbox20]

Let me revise, it would be difficult to validate your work down the road 🙂

FAR: Passed
REG: Passed
BEC: Passed
AUD: Passed

[jrd56202]

Thanks everyone! I'm just starting to feel the pressure by getting emails about training, etc, and I'm starting to freak out about everything. haha I interned where I'm starting a little over a year ago, but I feel like everything will be new again. Especially since I did not have to do any of these.

BEC-72
AUD-71, Retake 8/28/14, 85!
FAR-64
REG-72

[Anonymous]

Try to find out a bit about the industry before hand. I was in the insurance industry and was send to do an inventory at a company that makes circuit boards. It was a horrible experience. They didn't stop production for the count, and my awesome selection abilities selected more than one batch of materials that was literally in the machine while I was trying to count.

So try to learn as much as you can about the types of products/materials you will be counting before you go.

[jrd56202]

Oh gosh that sounds horrific. I think my Senior is supposed to sit down and give me some background details before I go. I think they'll send me out on one that they have already had experience with and tell me what to expect kind of. I just wanted to get some of your alls inputs though.

BEC-72
AUD-71, Retake 8/28/14, 85!
FAR-64
REG-72

[TNCPA16]

I had to do an inventory observation last year for our external auditors because no one else was available (I'm an IT internal auditor)…I told my boss I would quit if he ever made me go do another one! It was the first time this place had ever had their inventory audited and it was a disaster. The work itself wasn't difficult, but the guy in charge of the inventory did not know what he was doing.

My advice – read through all of the procedures beforehand and make sure you understand expectations. If there is a prior year file, read through that too. You many be there by yourself, but don't be afraid to call/email your senior/manager.

[jrd56202]

I surely hope they wouldn't send me out to someone who had never had their inventory observed! That does sound awful. I'm pretty sure you just made me feel a little worse haha Thanks for responding though!

BEC-72
AUD-71, Retake 8/28/14, 85!
FAR-64
REG-72

[TNCPA16]

Ha, sorry jrd! Didn't mean to make you feel worse! I should also probably mention that this inventory took place in one of the worst cities (in my opinion) in the country, and I had to leave my work (I'm the only IT auditor for my company) in the middle of my busiest time to go waste a day doing inventory. It really isn't that difficult to do. We just hired a new staff and are sending her out to do the inventory this year…apparently my boss took my threats to quit seriously 🙂 Just make sure you are prepared as much as you can be on the front end and you'll be fine!

[ssmagnus]

Here is what you should walk away with at the end of the inventory and you'll be golden (former Big 4 auditor here):

1. Note the “as of date” for the inventory you are performing (ie. inventory as of 12/31/2014)

2. COPY OF: Inventory listing from the accounting system that agrees to the general ledger (or general ledger reconciliation); not how many line items are on the list and dollar values; spread out your test counts between small, moderate, and large value items.

3. COPIES OF: Shipment activity report a couple of days before and a couple of days after the “as of date”

4, COPIES OF: Receiving activity report a couple of days before and a couple of days after the “as of date”

5. Have you senior provide you chart that will tell you how many items you need to count (X from the inventory warehouse to the inventory listing; Y from the inventory listing to the inventory warehouse).

6. COPIES: The client's count sheets that show they counted the items you picked to count (the docs they used to record their counts)

7. Keep your eyes out for inventory that has not been counted or segregated from the warehouse. Ask to see or inquire about containers that are closed.

8. DO YOUR TEST COUNTS PER #5.

9. GET YOUR SENIOR'S CELL PHONE # and warm him you want to do it right so you will call a ton.

If you do all of the above, as long as you do your test counts, you will have enough evidence to identify any problems.

Happy inventory observation!

AUD 93 (5/14)
FARE 80 (8/14)
BEC 77 (11/14)
REG 81 (4/15)

[leglock]

saved for later

[Anonymous]

I just went through my first inventory observations a couple of months ago. It was a breeze. We just get a detailed inventory listing and we highlight all of the amounts that are material based on our materiality calculation and then we pick some random items. We then give them the list of items we selected and they take us to each item. They count and we count with them to make sure we're getting the same number. We try to count around 25% of their inventory, i.e. if they have $1 million in inventory, we would try to count $250,000 worth of inventory.

Tada, you're done.

[Anonymous]

If you are inventorying anything liquid in a large tank, such as crude oil, tap the sides of the tank to make sure it doesn't sound hollow. Even though you climbed on top of the tank and watched the employees put the massive stick in the fill hole and their reading said it was full, it might not actually be full. Does this make sense?

[Author]

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