Question 1c
Examiners Report

Part (c) for 10 marks required an identification and explanation of controls over the continuous/perpetual inventory counting system in order to ensure completeness and accuracy of the inventory records. This question proved to be challenging for a number of candidates and there were some unsatisfactory answers.

Many identified controls, such as “the inventory team should be independent of the warehouse staff” but failed to then explain these controls, this would have restricted their marks to ½ mark per control as opposed to the 1½ marks available for an identification and explanation.

As noted above for question 1a, many candidates identified inventory risks in 1a, but then did not consider the controls required to address these risks for question 1c, and hence missed out on available marks.

In addition despite the question asking for controls a significant minority of candidates provided substantive procedures the auditor would perform at an inventory count. Candidates must read the question carefully. Also many candidates failed to appreciate that the controls required were in relation to the perpetual inventory system only and not for the whole inventory cycle, hence controls in relation to goods received notes and purchase invoices were not relevant.

We use cookies to help make our website better. We'll assume you're OK with this if you continue. You can change your Cookie Settings any time.

Cookie SettingsAccept