[AJE]

Could someone give me a rundown of what I need to be doing on an inventory count? I just started in audit (2.5 months ago) and they are sending me out solo to do an inventory count at some big retail store. I have no idea what is suppose to happen.

Of course, I’ll talk to someone here about it but I’m better at understanding the process through reading so I’d like to have that conversation after learning a little about it.

FAR 91 - 04/16
BEC 87 - 05/15
REG 77 - 07/27
AUD 92 - 08/31

[acamp]

Very simply put:

The Company counts their inventory to ensure that inventory per their books equals actual physical inventory on hand (this is how they can adjust for lost items, theft (shrinkage), etc).

In performing their count they will generally divide the store into sections. A rack of clothes may be one section, or picturing a supermarket isle, all the rows of one shelf width may be a section (thus one isle might be 20 sections).

Where you come in is making sure what they counted is accurate and complete. While your exact timing may differ it works basically like this:

After they count everything the Company spits out a report (“the sheet”) that has all the numbered sections and the SKUs and Quantities in those sections.

Accuracy “Sheet to Floor”: You select sections from the count sheet (in accordance with your firm's sampling guidance), find those sections in the store and physically re-count the section to ensure it agrees with what the Company counted.

Completeness “Floor to Sheet”: You walk around the store and randomly select sections from “the floor”, count everything in the section and trace to the sheet to ensure all the items were properly included in the sheet.

Ninja + Wiley Test Bank: [FAR - 81] [REG - 76] [BEC - 88] [AUD - 73](doh!)

Becker Videos: [AUD - 82]

California CPA

[Andyred04]

Probably the biggest variable you'll run into with dealing with a retailer is inventory sold after their count and before your count. You'll probably have to trace any variances to sales records to determine the reason for the variance.

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[Hello2016]

Interesting, good to know how it works, Sorry I am a newbie, May I ask what job title is this job(auditor?) ? Is this considered internal audit?

[Andyred04]

@Hello2016, this sounds like an external engagement but definitely could be within the scope of the company's internal audit department as well

FAR: 80 (Gleim, Ninja Notes, Ninja MCQs)
REG: 87 (Gleim, Ninja Notes, Ninja MCQs)
BEC: 87 (Gleim, Ninja Notes, Ninja MCQs)
AUD: 8/27/16

PA Candidate

[AJE]

Yep, external audit. Trust, but verify as they say

FAR 91 - 04/16
BEC 87 - 05/15
REG 77 - 07/27
AUD 92 - 08/31

[Skynet]

For CPA Candidates, it is the numbers of total CPA Review Book Editions Collected over the time spent studying for the exams : )

[Hello2016]

@Andyred04 Thanks

[Anonymous]

The retail people will know exactly what is going on. You will probably just take sample counts of your own and review samples of the stuff they've already taken inventory on. As a disinterested third party your opinion is not biased / tainted.

[Author]

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