How to Audit Inventory (CPE Course)

CPE Credit: 2.5 hours

Course Type: Downloaded PDF materials with online test

Price (with PDF Textbook): $30

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Course Description
This course clarifies for the auditor every action needed to audit inventory. It describes the characteristics of inventory from an auditing perspective, and then goes on to describe the steps required to audit inventory. Background information concerning inventory is also included, such as physical inventory counts, the lower of cost or market rule, and inventory cost layering.

Author: Steven Bragg

Course Number: AU1009

Table of Contents
Chapter 1. Auditing Inventory
Chapter 2. The Physical Inventory Count
Chapter 3. The Lower of Cost or Market Rule
Chapter 4. Inventory Cost Layering

Learning Objectives

  • Recall the classifications used for inventory.

  • Specify the characteristics of the different types of inventory fraud.

  • Describe the situations in which inventory errors can lead to material misstatements.

  • Describe the substantive procedures used by an auditor to audit inventory.

  • Recognize the items to be reviewed as part of an inventory test count.

  • Specify the actions to be taken when testing inventory costs.

  • Describe compilation testing.

  • Identify the additional inventory audit steps used when a new client was not audited in the past year.

  • Cite the circumstances under which a physical inventory count can be avoided.

  • Recall the issues associated with a client using a separate count team to verify the counts made.

  • Recall the details of the lower of cost or market rule.

  • Specify the advantages of the various inventory costing methods.

Level: Overview

Instructional Method: QAS Self-Study

NASBA Category: Auditing

Prerequisites: None

Advance Preparation: None

Latest Review Date: August 2023

Program Registration Requirements: Click on "Purchase Course" near the top of this page to pay for and access the course. You will then be able to download the course as a PDF file, then take an on-line examination, and then download a certificate of completion if you pass the examination.

Program Refund Policy: For more information regarding administrative policies concerning complaints, refunds, and other matters, see our policies page.

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AccountingTools, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have the final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org.

The NASBA sponsor identification number for Accountingtools, Inc. is 115881.

AccountingTools is an IRS Approved Continuing Education Provider. We are compliant with the requirements for continuing education providers (as described in sections 10.6 and 10.9 of the Department of Treasury’s Circular No. 230 and in other IRS guidance, forms, and instructions). Our IRS Approved Continuing Education Provider number is 72821.