Skip to content

CS Professional · Internal and Forensic Audit · Special Points relating to Internal Audit in various Entities

At Verma Steel Works, the internal auditor attends the annual physical verification of inventory. Which action best strengthens reliability of the count?

The best action is to perform test counts both from records to floor and floor to records, while noting damaged or slow-moving items. This checks existence, completeness and valuation of inventory. Accepting count sheets untested, ignoring cut-off or counting only low-value items would weaken the reliability of the verification.

  1. APerform test counts from records to floor and floor to records, and note slow-moving or damaged itemsCorrect
  2. BAccept the stores manager's count sheets without testing
  3. CCount only items of low value
  4. DSchedule the count after the books are closed without cut-off checks

Explanation

Testing in both directions checks completeness (floor to records) and existence (records to floor). Noting damaged or slow-moving items supports valuation. Accepting sheets untested, counting only low-value items or ignoring cut-off weaken reliability.

Did you get it right without looking?

One question tells you little. A timed set on Special Points relating to Internal Audit in various Entities shows your real accuracy, how long you take and where you lose marks.

Practise Special Points relating to Internal Audit in various EntitiesFree diagnostic mock

More Special Points relating to Internal Audit in various Entities questions