Part of any audit is attendance at the client’s inventory count. If the company being audited has material inventory in multiple locations, you’ll have to observe each count.
I’ve been busy lately with inventory counts. Yesterday I went to one and counted washing machines and dryers. This morning I was counting packages of cottage cheese, sour cream, and other dairy products. I’ll be doing the same thing tomorrow morning, at 7am! On a Sunday!
From the auditor’s point of view, the inventory count is all about making sure the client conducted the count accurately. So we test some of the counts, selecting items from the inventory listing and finding them on the floor, and selecting random items from the floor and tying them back to the listing.
Sometimes the client will estimate inventory, if counting is not feasible. For example, a gravel pit operator will have piles of gravel and sand and whatnot, and it’s not reasonable to count or weigh it. Obsolete or slow-moving inventory will need to be segregated as its value is much lower.
After attending the count, the auditor will summarize his/her findings in a “count memo”, as well as reporting directly the results of the individual sheet to floor and floor to sheet tests. The count memo provides a narrative of the experience, the arrival time and details regarding the count procedures and general conditions at the location.
For me, the best part about inventory counts (that aren’t on weekends) is that we’re allowed to wear jeans/casual clothes back at the office for the rest of the day. Anyone questioning your attire gets the standard reply: “I had an inventory count this morning.” It’s foolproof.