Identify whether each of the procedures is primarily a test of control or a substantive test.

Following are audit procedures commonly performed in the inventory and warehousing cycle for a manufacturing company:
1. Account for a sequence of raw material requisitions and examine each requisition for an authorized approval.
2. Trace the recorded additions on the finished goods perpetual inventory master file to the records for completed production.
3. Compare the client’s count of physical inventory at an interim date with the perpet-
ual inventory master file.
4. Use audit software to compute inventory turnover by major product line and com-
pare it to turnover in the prior year.
5. Read the client’s physical inventory instructions and observe whether they are being
followed by those responsible for counting the inventory.
Required
Required
In-class
Discussion
Chapter 21 / AUDIT OF THE INVENTORY AND WAREHOUSING CYCLE 723
6. Account for a sequence of inventory tags and trace each tag to the physical inventory
to make sure it actually exists.
7. Trace the auditor’s test counts recorded in the audit files to the final inventory
compilation and compare the tag number, description, and quantity.
8. Compare the unit price on the final inventory summary with vendors’ invoices.
a. Identify whether each of the procedures is primarily a test of control or a substantive test.
b. State the purpose(s) of each of the procedures

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