Exercise 1 - jb nagar cpe study circle of wirc of icai

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Audit ChecklistAudit Steps for Practices Followed in the Past1. Check Balances in Stock Register (audit program for validation stock register separatelyaddressed)2. Check Balances in physical stock take sheet (program from validating physical stockverification sheet separately addressed)3. Check approval of shortages/excesses in inventories4. Check Valuation of inventories --Cost or Market Value whichever is lowera. Components of includes;i. Purchase Priceii. Taxes not refundableiii. Freight inwardiv. Cost of storage before putting the inventory at its intended location for itssale or useb. Components of excludes;i. Modvatii. Cash discountiii. Discretionary discountsiv. General corporate administration expensesv. Selling expenses5. Check Calculation6. Trace it to Balance Sheet and P & L16 Rakesh Agarwal
Audit ChecklistFrom Accounting Standard ChecklistQUESTIONNAIRE FOR ASCERTAINING COMPLIANCE OF AS–21) (a) Is the inventory valued at lower of cost and net realisable value?(b) Is the disclosure made to that effect in accounting policy?2) (a) Which is the cost formula used(b)(i)(ii)(iii)Specific identification?FIFO?Weighted Average?Is the disclosure made to that effect in accounting policy?3) Have you ascertained whether cost includes(a)(b)(c)(d)Cost of purchase (net of Modvatable duties)?Direct labour?Production over heads?Such other direct cost to bring inventory to their present location and condition?4) Whether fixed overhead is worked out on normal production capacity; i.e., after taking intoaccount loss ofcapacity due to planned maintenance?5) Have you ascertained that cost of conversion does not include the following :(a) Interest, (Unless permitted by AS 16)?(b)(c)(d)Administrative overheads?Selling and distribution cost?Abnormal wastage of material, labour and other production cost?6) If standard cost method followed to ascertain cost, whether standards reviewed periodically?7) In arriving at cost of inventory, whether(a)Inter-divisional profits eliminated?(b) Foreign currency fluctuation excluded and charged as expense in respect of foreigncurrency loanobtained against stock?8) (a) Is physical verification of inventory taken at year end?(b)In arriving at net realisable value , have you ascertained(i)(ii)damaged/obsolete/non-moving stock?subsequent sale price after Balance Sheet Date?9) Are the inventory in accounts classified into :(a)(b)(c)(d)Raw material and components?Stores and spares and tools?Work-in-progress?Finished Goods?From Auditing Standard ChecklistNone17 Rakesh Agarwal
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Page 7 and 8: case the work in progress the amoun
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Page 13 and 14: Audit ChecklistSample 4 ACompliance
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Page 17: Audit ChecklistSolution Exercise 1

Exercise 1 - jb nagar cpe study circle of wirc of icai

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