Office Inc. imports office equipment from Asia and Europe for sale in Ontario. The company has only
Question:
Office Inc. imports office equipment from Asia and Europe for sale in Ontario. The company has only one business location, which includes both an office area and a warehouse. The company has a year-end of December 31, 2013, and inventory on hand is usually lower at this time of the year. This is the first year that the auditor is participating in the audit. On December 15, 2013, the auditor reviewed the client’s inventory-counting procedures from the previous year, which were as follows:
The count will start at 7:00 AM Sunday, December 30, and is expected to finish around 5:00 PM.
The sales office will be open but no products will be shipped or received on that day.
Only staff who are assigned to the count will be allowed in the warehouse.
All inventory will be noted on pre-printed, serially numbered count sheets.
Every counter’s clipboard will include a notepad. If counters find inventory that is not listed on the count sheet, they will note the inventory on a blank sheet in the notepad so it can be added to the company’s records later.
Counters will verify the part number as well as the quantity for all items. The price is automatically recorded with the part number so counters do not need to be concerned about pricing.
All staff will work in teams of two persons.
Counters will turn in the completed count sheets and all sheets from the notepad with items listed on them, at the end of the day before leaving the building.
Required:
Describe how you would improve the company’s inventory counting instructions. Provide six examples in your answer from the case facts below. Be very specific in explaining the WHAT and the WHY.
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta