METHODOLOGICAL FRAMEWORK FOR CONDUCTING INTERNAL AUDIT OF THE ENTERPRISE'S INVENTORY

Abstract

The article reveals the methodological aspects of organizing and conducting an inventories internal audit of the enterprise. The purpose, subject, tasks of internal audit of material and production stocks of the enterprise are defined. The issues that need to be clarified as a result of the internal inventory audit are described. There are seven main stages of an inventory audit based on a risk-based approach: understanding the object of the audit, risk analysis, analysis of controls, drawing up an audit program, sampling, substantive audit, drawing conclusions and recommendations. Particular attention is paid to the process of risk analysis of accounting and control of inventories of the enterprise. The events influencing changes in the probability and significance of risks of accounting and control of inventories of the enterprise are outlined. Risk factors for inventory transactions have been identified. The sources of audit evidence in the internal audit of inventories are indicated. The purpose of tests of means of control is outlined, and also signs of effective system of internal control and accounting of stocks are formulated. The verification procedures are defined in essence in accordance with the risk factors. The list of procedures which it is expedient to apply at a stage of check in essence is defined. The methods of internal audit to obtain audit evidence in the internal audit of inventories are disclosed. The list of possible errors and violations of accounting and control of inventories, which are often allowed and affect the reliability of accounting data and accounting (financial) statements. The list of possible violations is classified depending on the sub-processes of inventory accounting. The purpose of development of recommendations on results of carrying out of internal audit of production stocks is defined. It is concluded that the application of the proposed methodological principles in the organization and conduct of internal audit of inventories will assess the system of internal control, establish the true state of inventory and apply the results of audits to eliminate identified violations and improve the organization.