An extract of the audit workpaper A100 Obtaining an understanding of the entity: Inventory and inventory...

 

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An extract of the audit workpaper A100 "Obtaining an understanding of the entity: Inventory and inventory obsolescence allowance" completed during the planning stage of the audit during August 2020 is documented below: WP/A100 SSB Incorporated Client: Eco-Muhle Skincare (Pty) Ltd Period: Subject: Y/E 31/07/2020 Obtaining an understanding of the entity: inventory and inventory obsolescence allowance Prepared by: Date: Reviewed by: Date: SA 12/08/2020 1. Eco-Muhle's inventory balance comprises raw materials, work-in-progress and finished goods. Inventories are valued at the lower of cost and net realisable value using the FIFO basis. All inventories are issued directly to customers from the warehouse in Johannesburg. 2. The year-end inventory count takes place after hours on the last day of the financial year. The company only has one count for the year. 3. Management considers inventory obsolescence each year. Inventories (finished cows goods) are written off if aged (last date of sale is 9 months prior to year end), damaged activa or the likelihood of being sold is remote. WP/ A100 Client: Period: Subject: SSB Incorporated Eco-Muhle Skincare (Pty) Ltd Y/E 31/07/2020 Obtaining an understanding of the entity: inventory and inventory obsolescence allowance Prepared by: Date: Reviewed by: Date: ➤ quantity on hand at the beginning of the financial year; ► year-to-date sales quantity; 4. The inventory masterfile pertaining to finished goods contains the following fields: ➤ inventory item number; ➤ inventory item description; ➤ date of last sale per item; ➤ quantity on hand at the beginning of the financial year; ► manufacturing cost per unit; ➤ unit selling price at year end; and ➤ value of inventory at the end of the financial year. Additional information: SA 12/08/2020 Activate Windows Go to Settings to activate Windows. During September 2020, management provided you with the following information that is relevant to the audit of inventory: 3. Raw materials used in the manufacturing process and work-in-progress comprise specialised chemical ingredients. Management engaged with an independent expert, Mr Ntseko, to assist in the inventory valuation at year end as management themselves do not have such expertise. Mr Ntseko is well qualified, experienced and has assisted Settin to acti management in valuing their inventory for a number of years. He is subject to professional standards and is in good standing with his professional body. An extract of the audit workpaper A100 "Obtaining an understanding of the entity: Inventory and inventory obsolescence allowance" completed during the planning stage of the audit during August 2020 is documented below: WP/A100 SSB Incorporated Client: Eco-Muhle Skincare (Pty) Ltd Period: Subject: Y/E 31/07/2020 Obtaining an understanding of the entity: inventory and inventory obsolescence allowance Prepared by: Date: Reviewed by: Date: SA 12/08/2020 1. Eco-Muhle's inventory balance comprises raw materials, work-in-progress and finished goods. Inventories are valued at the lower of cost and net realisable value using the FIFO basis. All inventories are issued directly to customers from the warehouse in Johannesburg. 2. The year-end inventory count takes place after hours on the last day of the financial year. The company only has one count for the year. 3. Management considers inventory obsolescence each year. Inventories (finished cows goods) are written off if aged (last date of sale is 9 months prior to year end), damaged activa or the likelihood of being sold is remote. WP/ A100 Client: Period: Subject: SSB Incorporated Eco-Muhle Skincare (Pty) Ltd Y/E 31/07/2020 Obtaining an understanding of the entity: inventory and inventory obsolescence allowance Prepared by: Date: Reviewed by: Date: ➤ quantity on hand at the beginning of the financial year; ► year-to-date sales quantity; 4. The inventory masterfile pertaining to finished goods contains the following fields: ➤ inventory item number; ➤ inventory item description; ➤ date of last sale per item; ➤ quantity on hand at the beginning of the financial year; ► manufacturing cost per unit; ➤ unit selling price at year end; and ➤ value of inventory at the end of the financial year. Additional information: SA 12/08/2020 Activate Windows Go to Settings to activate Windows. During September 2020, management provided you with the following information that is relevant to the audit of inventory: 3. Raw materials used in the manufacturing process and work-in-progress comprise specialised chemical ingredients. Management engaged with an independent expert, Mr Ntseko, to assist in the inventory valuation at year end as management themselves do not have such expertise. Mr Ntseko is well qualified, experienced and has assisted Settin to acti management in valuing their inventory for a number of years. He is subject to professional standards and is in good standing with his professional body.