Lesson: Auditing the Inventory Cycle

In this lesson, the focus is on auditing the inventory cycle and covering various aspects like segregation of duties, internal controls, and assertions. The lesson examines the importance of separating authorization, custody, and recordkeeping functions to prevent fraud and errors in inventory management. There will be a discussion about testing segregation of duties using different methods, such as inquiry, observation, and evaluating roles and responsibilities. The lesson also emphasizes the need to identify both fraud and error to ensure the accuracy of financial statements.<br><br>Additionally, this lesson delves into testing the existence, completeness, and occurrence assertions related to inventory. Various audit procedures are discussed, including reviewing and testing control procedures, examining inventory records, performing physical counts, and other substantive procedures. The lesson highlights how one procedure can assist with multiple assertions, and vice versa, and encourages a thorough understanding of these procedures.