Inventory and Inventory Held by Others

Free CPA AUD (Auditing & Attestation) lesson in Performing Further Procedures and Obtaining Evidence. 15 min read, ~2,204 words.

AU-C 501 requires the auditor to attend the physical count when inventory is material, unless attendance is impracticable. During the count: observe procedures, perform test counts (floor-to-sheet and sheet-to-floor), inspect condition, control tag numbers, note cutoff information. Third-party inventory: direct confirmation with the custodian; physical inspection when risk is significant...

What this lesson covers

• Content
• Example 1
• Common Mistakes
• Key Takeaways
• Exam Shortcuts

Learning objectives

• III.E3

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