Can you explain how you would test inventories for existence?

Physical existence of inventory could be verified through physical stock taking at a period end as per book balance. Some inventory might be in the form of WIP verification of which is very difficult in the manually operated plants. Inventory in transit could be verified through evidential documents.

There are some procedures we can : :follow *Cut analysis, auditor will examine procedures for halting any further receiving into the warehouse or shipmentsomething from it at the time of the physical inventory count, so that extraneous inventory items are excluded. *Observe the physical inventory count. *Test high- value items *Reconcile the inventory count to the general ledger *Test error -prone items *Test inventory in transit

this is some thing you perform at the year end of the client that is at stock taking.you need to physically visit the warehouse and check against the records being provided if they exist.you will observe the stock taking guide lines and the stock taking procedures actually performed by the client staff for thier reasonableness.you may need test the stock taking on your own.be sure to do so on sample basis if there is lot of inventory .you may need to sample a high volume of inventories if the stock you are verifying is a high valued product. if the same exist and are in good state its OK otherwise make a note of the same.also you need to keep eyes open for sort of stock highly dusted or placed in a very in accessible location .this could be the sign that the stock is obsolete ,such stock is also worth taking note of for stock valuation purposes .hope this answers your question.