Assets classified as inventory vary widely with the nature of the entity and industry. Depending on the complexity of the inventory and the related pricing model, the risk of material misstatement will vary widely as well. This module primarily focuses on performing the inventory observation while introducing other risk concepts related to inventory.

Major Topics:

  • Typical inventory observation procedures and special considerations
  • Handling various inventory observation real-life scenarios
  • High level overview of valuation and pricing methods
  • Key controls related to inventory
Learning Objectives
  • Identify and discuss typical audit risks and special audit considerations related to inventory.
  • Discover and describe common inventory observation audit procedures.
  • Explore and explain key controls related to inventory.
  • Recognize and compare inventory pricing options at a high level.
Last updated/reviewed: August 26, 2023

Included In Certifications

This course is included in the following Certification Programs:

13 CoursesAudit Training Certification - Level 1 - Beginning Staff

  1. Professional Skepticism - Creating a Mindset for Finding Fraud and Error
  2. Audit Documentation - Creating Workpapers That Pass Review
  3. Adapting to the Engagement - Differentiating the Requirements of Preparations, Compilations, Reviews, and Audits
  4. The Audit Risk Model - Understanding Foundational Principles
  5. Internal Control Fundamentals - Satisfying Audit Requirements for Evaluating Design and Implementation
  6. Auditing Cash - Applying Basic Skills to the Starting Point of Any Audit
  7. Auditing PP&E, Including Leases under Topic 842 - Digesting the Risks of Improper Treatment of Tangible Long-Lived Assets
  8. Auditing Inventory - Performing Required Observations and Other Common Procedures
  9. Analytical Procedures - Comprehending Financial Statement Audit Fundamentals
  10. Audit Reporting Fundamentals - Introducing Core Concepts in the Audited Financial Statement Drafting and Issuance Process
  11. AICPAs Code of Professional Conduct - Exploring the Foundational Principles Underlying the CPA Profession as a Whole
  12. Accounting Update - Hot Topics for Preparing Current Period Financial Statements
  13. Auditing & Attest Update - Hot Topics for Current Period Audits and Other Attest Services
4 Reviews (18 ratings)

Reviews

5
Anonymous Author
This course was a great refresher and made sure that I knew what do when going to a client, especially if things are being done virtually.
5
Anonymous Author
Great course on audit procedures related to inventory as well as key controls related to the inventory business process.
4
Anonymous Author
Helpful basic course on auditing inventory. It even included some corny jokes!
5
Anonymous Author
This was a great refreshing course on inventory audit, will recommend it.
Prerequisites
Course Complexity: Foundational

No Advanced Preparation or Prerequisites are needed for this course.
Designed For: Accountants responsible for auditing inventory and performing inventory observations.

Education Provider Information
Company: Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact: For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .
Course Questions and Answers1 Question
There are no questions.         Answers to Frequently Asked Questions (FAQs)
User picture
Anonymous
(CPA) | Sep 28, 2022

I wanted to double-check about the accuracy of Exam questions 2, 4, and 14. Question number 2's answer seems like it should be "existence", but the answer key said it was "valuation". Question number 4's answer seems like it should be "FOB Shipping Point", but the answer key says "FOB Destination". And number 14's question says "What is the ceiling to compare to carrying value in valuation testing for FIFO inventory" and the answer key says "Net Realizable Value", but that appears to be the answer for LIFO inventory (not FIFO).

Please let me know if the answer key is incorrect or not for these questions (and any others that you review).

Instructor for this course
  Course Overview CPE
Course Syllabus
INTRODUCTION AND OVERVIEW
  Learning Objectives and Introduction to Auditing Inventory7:40
  Inventory Observation Procedures12:44
  Inventory Observation Procedures Cont'd10:44
  Remote Auditing3:50
  Case Study-Results of Inventory Observations13:10
  Year End Audit Procedures16:50
  Existence and Completeness of Inventory10:44
  Pricing and Valuation12:50
  Pricing and Valuation Cont'd8:35
  Key Controls Over Inventory3:53
Continuous Play
  Auditing Inventory - Performing Required Observations and Other Common Procedures1:41:00
Supporting Materials
  Slides: Auditing Inventory - Performing Required Observations and Other Common ProceduresPDF
  Auditing Inventory - Performing Required Observations and Other Common Procedures Glossary/IndexPDF
Review And Test
  REVIEW QUESTIONSquiz
 FINAL EXAMexam