Inventory audit questionnaire

If you are a highly organized person and give importance to every detail then you can definitely make a career in Inventory management. There is a growing demand for inventory managers in the manufacturing units, retail units, food service, pharma units and other inventory-intensive industries. In an inventory management job you will get experience in supervising the flow of inventory, storage of goods and controlling the quantity of goods.

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An inventory management job is important in both small businesses where you can use Excel and for large businesses where you can work on ERP software. On www. You can also prepare yourself for the job interview by reading the inventory management job interview questions and answers that are available on our page.

Question 1. Answer : A inventory should be taken at least once a year. If items are perishable, seasonal or highly demanded a inventory should be taken more often. Question 2. Answer : Yes, In the market today there are many computer software packages that can compute forecasted demand for goods held in inventory.

Question 3. Question 4. Answer : Yes, through the use of forecasts inventory levels can be set to meet the demands while keeping levels as low as possible.

Question 5. Tell Me What Is Forecasting? Answer : Forecasting is the process of estimating the future demand of a product. Question 6. What Is Raw Material?

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Answer : Are those basic inputs that are converted into finished product through the manufacturing process. Raw materials inventories are those units which have been purchased and stored for future productions. Question 7. Answer : A order point is a point in time at which a order is placed to replenish goods in inventory. Question 8. Answer : Demand is the quantity that customers are willing to buy.

Demand can be found through forecasting and is needed to find the EOQ level. Question 9. Answer : An order quantity is the amount of goods that an order requests be shipped to the store. Question Answer : There are two types of forecasting qualitative and quantitative.

Qualitative uses personal opinions to determine forecasts.

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Quantitative uses numerical data and statistical modeling to determine forecasts. Explain What Is Lead Time? Answer : Lead time is the period of time from which a order for goods is placed until it is received by the store. Lead time is an important consideration for determining when orders should be placed. Answer : Yes, a discount will cause the basic EOQ model to fail.

Answer : A cycle count is an inventory auditing procedure, which falls under inventory management, where a small subset of inventory, in a specific location, is counted on a specified day.The objectives of an inventory audit process are to prove the existence, rights, accuracy and realizable value of items in a company's inventory.

An auditor uses multiple analytical procedures to verify a company's inventory methods and confirm that the financial records match the physical counts. An auditor reviews the company's plans and procedures for counting inventory and often physically observes the actual counting methods to determine efficiency. To verify the physical inventory counts, the auditor may randomly select samples from the warehouse or storage area and locate them in the count records.

This also may be done in reverse, with the auditor selecting records from the count and then matching the figures to the actual items in inventory to verify existence. Statistical sampling is one method businesses use to count inventory.

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Counting only a portion of the inventory and then applying the statistical results to the inventory as a whole can greatly reduce the time spent on the count. When an auditor uses this method, he then checks to see that the results, if reasonable, have statistical validity and are properly applied across the entire inventory.

The auditor determines whether the statistical methods would produce the same results as a complete physical count. An inventory audit establishes that all inventory recorded by the business actually belongs to the company. For example, the auditor may reconcile purchase orders and vendor invoices with canceled checks to ascertain whether the inventory has been purchased.

During the inventory audit process, the auditor will determine whether or not any inventory belongs to customers and has not yet been shipped and if any products and items in inventory stand as collateral for a business loan. The auditor will match the inventory counts to records in the general ledger to ensure that the values are correct and conform to generally accepted accounting principles. In situations where the business carries high-value items in inventory, an auditor may do a physical count on these to verify value.

The results will then be reconciled with the inventory values as listed in the financial records. The auditor checks the quality of products and items in inventory and verifies that excessive or damaged products are accurately listed at realizable value.

Vicki A Benge began writing professionally in as a newspaper reporter. A small-business owner sinceBenge has worked as a licensed insurance agent and has more than 20 years experience in income tax preparation for businesses and individuals. Share It. About the Author. Photo Credits.Inventory Audit Checklist.

inventory audit questionnaire

Risks associated with Inventory. Internal Controls for Inventory. Physical Inventory Counting. Age Analysis of Inventory. ABC Analysis of Stock. Inventory Cut off Process.

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How to Control Inventory Costs. Inventory is a crucial area for any manufacturing or trading entity. We often hear following questions regarding stock controls and audit which we will try to address in this section. Inventory is one of the important area for any business where chances of fraud are more as its a department where thefts and damages occur. Having strong controls, proper processes, checklist and regular stock audit is essential for this function. Following is the checklist for internal audit of Inventory.

inventory audit questionnaire

Lets now learn how to stock audit physically. Following is the checklist for physical stock audit. Every item should be counted at least once every quarter. Planning of Inventory Physical counting is very crucial. Cut off Procedure should be observed strictly during physical verification. Equipment required for physical counting should be made available.

Staff should be well trained for the process.

Audit Pre-Screening Questionnaire

Proper working papers should be maintained. Employee in charge of stock and auditor should put signature, date on working papers.

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Age of any inventory item is decided based on its receipt date. Its a very important report for finance heads, production heads, store managers. One should always closely watch the old items of inventory and try to clear them out at earliest. Old items not only occupy space and rent expenses are increased and also block funds and thus result in interest expenses. Most of the accounting softwares can generate Age Analysis Report for inventory.

Such analysis helps to focus on most important items and saves efforts, time and costs. Cut off process is very important in Inventory valuation.Visit coronavirus.

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Scroll to the bottom to select [Print] to retain a copy of your responses. To change a response, click the Questionnaire tab at the top of the screen. Click [Submit] to submit your responses. Once submitted, access to the questionnaire is no longer available. Question 3: Is your organization part of, affiliated with, or otherwise owned or controlled by another organization? Question 6: Does your organization or another entity on your behalf, conduct health care transactions such as submitting a claim for payment, checking patient health plan eligibility or benefit coverage, or receipt of payment or remittance advice in electronic form?

Question 7: What type of health care provider are you hospital, urgent care, skilled nursing, etc. Question What is the current number of clinicians on staff or with privileges in the facility ies? Question Do you maintain or transmit protected health information in electronic format? Question What is the average number of claims processed monthly in the most recent fiscal year? Question Do you utilize a third party administrator TPA or other entity to perform most of the health plan functions?

Question If you are a group health plan sponsor, do you receive only summary data from the group health plan, health insurance issuer, or HMO? Question What is the total number of transactions processed monthly in the most recent fiscal year? Question 21 : What is the current number of healthcare providers, health plans, and other entities served?

Question Do you operate only as a business associate and do not maintain protected health information or perform covered functions as a covered entity apart from your activities as a business associate?

Question Please briefly describe the nature of your business associate activities e. Question Identify the type s of covered entity ies for which you provide business associate functions choose all that apply. For example, if you are a business associate to an OCHA comprised of 10 covered providers, add 10 to the covered provider total option below. Question Do your business associate activities involve maintaining or transmitting protected health information in electronic form?

Question Do you perform business associate functions in more than one state?This where auditors use lengthy procedures to test whether this valuation is placed correctly or not. Usually, auditing has multiple benefits, each of which will determine how the company shall progress with the changing industry without landing into troubles like overstock and shortfalls. As an auditor for a company, you will have to keep yourself updated regarding everything that is happening.

You need to investigate to see whether the company is moving in a direction that will have no speed bumps, and you need to give a very clear and accurate count to the client regarding the current inventory size while he handles the product and service exchange aspect of his business.

But to make sure that your auditing process is accurate and not lengthy, there are a couple of systems you need to have in place. They will make your work faster and keep you well informed regarding the overall transaction that the company is partaking in, and how that will affect its inventory. Inventory Locator : First things first- you have to figure out all the inventory locations.

Do you keep inventories in different places? If so, where? These questions will help you to get accurate figures which in return, would help the company assess its value. The Inventory Locator services will help you to quickly spot the products that are meant for transactions. Always check out the warehouses, overstock locations, or any other storage areas where you can see all the stock for yourself before the physical inventory count begins.

Inventory Audit Checklist : It is extremely important that you start with a checklist of all the items that should be in the inventory before starting the count. You can add to this list, or make changes as required. This Inventory Audit Checklist will help you to maintain an impeccable record, where all data is regularly updated and presented systematically.

Inventory Management Systems : This system makes your auditing process much easier and quicker. It is a blend between inventory control software, smart devices, barcode scanners and barcode printers.

You can figure out the quantity, cost and location of every single product in the storage areas. If some products are already shipped but the data is not entered into the system, it will be hard to explain where the items have disappeared to. A company can declare its value depending on its current list of stock, and any mistakes in accounting will lead the company into trouble.

This is why using a very clean efficient system is very important, which can make inventory auditing quite fast and regular without leaving any room for error.

If you are currently running Intacct or Quickbooks and would like to schedule a free consultation to see if QStock is right for you as your next potential Warehouse management system, Contact Us Today by filling in the form below. We would love to hear about your business and how QStock can help you achieve your business goals. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment.

Notify me of follow-up comments by email. Notify me of new posts by email.The primary reason auditors observe their client taking the physical inventory is to make sure the inventory reflected on the balance sheet actually exists and that the balance sheet includes all inventory owned by the company.

This includes all raw materials, supplies, inventory in transit when using Free on Board FOB shipping point, inventory the company may have on consignment with another business, and inventory stored off the premises. Confirming the existence of inventory through your observations addresses the occurrence and completeness assertions as well.

To know whether your client is getting an accurate count, you need to know many different things about the business. Do your investigative work in advance so that you know what to expect and can have an informed opinion about whether everything is going as it should. Here are some basic suggestions to get ready for the inventory audit. Tailor them to your client. For some clients, these steps may be too much. For other clients, you may have to add steps. Otherwise, your audit team leader can provide further assistance.

Identify inventory locations: Find out from your client where it stores inventory. Is more than one location involved? Tour the business: Check out the warehouse or other storage areas before the physical inventory count so you know the lay of the land.

If your client is in retail, make sure the shop is closed to the public during the count. Sounds like a no-brainer, right? Your job is to watch the employees and make sure they follow the agreed -upon procedures. For example, you want to catch if swimsuits are recorded as 1, If need be, you can propose a journal entry to adjust ending inventory on the books to actual, per your sampling and testing.

Discuss this matter with your audit supervisor for more guidance. Remember, under no circumstances do you step in and help the client take its own inventory. When your client is taking its inventory, make sure it keeps special track of obsolete and damaged items.

What to Look for When Auditing Inventory. Related Book Auditing For Dummies. About the Book Author Maire Loughran is a self-employed certified public accountant CPA who has prepared compilation, review, and audit reports for fifteen years. Additionally, she is a university professor of undergraduate- and graduate-level accounting classes.Small-business owners can apply the results of inventory audits to examine their inventory management procedures and recording methods.

These audits assure small-business owners that the company's internal controls are protecting their inventory stocks from loss due to damage, theft and poor record-keeping methods.

inventory audit questionnaire

Business owners that have never undergone an inventory audit often have numerous questions about the auditing process. A company's inventory is the current count of products it has on hand to sell to its customers. An inventory audit involves a set of accounting processes developed to track a company's merchandise. Inventory audits check to see that the company's inventory procedures are functioning as they should.

For companies with large inventory stocks, the results from regular inventory audits ensure business owners that their recorded inventory counts are accurate and up-to-date. The inventory auditor sets a "cutoff date," which means that the small business will neither send nor receive any more inventory until the audit is complete. The cutoff date ensures that the audit will deliver an accurate count.

The auditor will then check how the inventory is organized and, if necessary, refine the organizational structure to ensure that each type of item gets an accurate count. The audit will also include an examination of the condition of the items and will include counts of damaged, broken and obsolete items. Larger companies may have an internal audit department that handles tasks such as inventory audits. Small businesses, on the other hand, often rely on external auditors to manage their inventory audits.

The auditors will install their own procedures for the counting process.

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For example, the auditor will determine if the inventory requires physical counts or if automated processes, such as scanning bar codes, are acceptable. In some instances, auditors will supervise the workers who conduct the inventory counts to ensure accurate results.

Since inventory is a leading expense for small businesses, owners rely on accurate inventory audits to determine their costs. These results can also help small-business owners determine which items are overstocked and which ones require restocking.

If the data from the inventory audit does not match the recorded counts, the owners may consider reassessing their record-keeping processes. If the audit results for numerous high-priced items show lower counts than the company's internal records indicate, the owner may look at the possibility of employee theft and fraud.

Living in Houston, Gerald Hanks has been a writer since He has contributed to several special-interest national publications. Before starting his writing career, Gerald was a web programmer and database developer for 12 years. Skip to main content. What Is An Inventory Audit?

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