Your audit senior has assigned you the responsibility of auditing the stock of your client, XYZ Supermarket Ltd. for the year ending 31 December 2005.The company‘s stock take is carried out once a year in the month Novembersimultaneously for all the retail outlets.Required:State the audit assurances you would seek to obtain in the audit of stock

Audit assurances in the audit of stock

– Whether a continuous inventory is maintained. There should be at least annual stock take
– Control over stock documents. Documentation should be considered by use of pre- numbered forms with regular sequence checks
– Controls over receipt of goods
– Storage conditions for stock
– Safeguarding of stock against loss, fire, deterioration due to poor storage
– Recording system. Stock records should be continuously compared with actual stocks held by independent officials
– Valuation per IAS 2 i.e. lower of cost and not realizable value
– Existence of stock
– Completeness of stock records
– Presentation and disclosure of stock in financial statements.
– Whether the company has rights and obligation over stock recorded.