Review of controls over credit extension and collection
Foreign currency exchange rates from newspapers, and so on
Inventory
Physical counts
Tests of year-end shipping and receiving cutoff procedures
Physical counts and confirmations
Purchasing and manufacturing cost records
Confirmation of inventories pledged under loan agreements, and so on
Confirmation of inventories not on hand
Reconciliations of physical counts with perpetual records and general ledger balances
Paid vendors’ invoices
Vendors’ invoices
Perpetual inventory records
Analytical relationship of balances to recent purchasing, production, and sales activity
Consignment agreements
Review of labor rates
Underlying purchasing records, including purchase orders, vendors’ invoices, and receiving reports
Analyses of general ledger account activity
Purchase agreements and contracts
Analyses of purchasing and manufacturing standard cost variances
Underlying production records
Review of controls over accounting for receiving, production, and shipping activities
Physical observations and confirmations
Open purchase commitments
Subsequent sales and delivery reports
Review of controls over inventory records
Current market value quotations and replacement cost information
Plant tour for possible excess and obsolescence
Discussion with production and sales personnel
Inventory turnover schedules
Industry experience and trends
Analytical relationship of balances to anticipated sales volume
Prepaid assets and deferred charges
Invoices, contracts, agreements, and other documents supporting additions to balances
Analyses of general ledger account activity
Documents supporting additions to balances
Documents supporting additions to balances
Terms of insurance policies, tax bills, and so on (current vs. noncurrent)
Review of controls over accounts payable and cash disbursements
Recalculation of amortization
Review of subsequent transactions
Recomputation of ending account balances
Analytical relationship of balances to estimated future utilization of assets
Discussion of realizability of deferred charges with appropriate personnel
Industry experience and trends
Fixed assets
Physical observations
Plant tour
Documents supporting confirmations
Documents supporting acquisitions
Minutes, representations, and other information regarding management’s intention to abandon or dispose of fixed assets
Documents supporting acquisitions, including authorizations in minutes, construction contracts, purchase orders, invoices, work orders, and so on
Analyses of general ledger activity
Lease agreements
Lease agreement terms
Confirmation of fixed assets pledged under loan agreements, and so on
Confirmation of equipment maintained at outside locations
Reconciliation of account activity to subsidiary property records
Analytical relationship of fixed asset dispositions to replacements
Confirmation of construction contracts payable
Vouching of repair and maintenance expense accounts
Review of controls over accounts payable and cash disbursements
Review of controls over construction work in progress
Appraisal reports, replacement cost quotations, and so on
Recalculation of depreciation and amortization
Analytical relationship of current year’s depreciation
