Three internal controls and test of controls of inventory of Kathmandu holdings.

Solutions

Expert Solution

Three internal controls of inventory are:

1. Proper protection of inventory: There should be proper lock for the inventory so that it could be protected from theft or any other accident.

2. Seggregation of inventory customer wise: Inventories should be properly divided and seggregated so that no confusion persist later on.

3. Signature for all inventory inserted or removed from the warehouse.

Three Test of controls of inventory are:

1. Inspection : It means that physical examination of inventory should be done and also the documentation of the same is also required to be checked.

2. Observation : Observation consists of looking at a process or procedure being performed. for example: the auditor's observation of inventory counting by the entity's personnel, or the process of control activities.

3. External Confirmation : Confirmataion from the third party can also be taken regarding the quantitites and condition of inventory held on behalf of the entity

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Kathmandu Holdings Limited is a public company with shares listed on the Australian Securities Exchange. Kathmandu...

Kathmandu Holdings Limited is a public company with shares listed on the Australian Securities Exchange. Kathmandu Holdings Limited is a transnational chain of retail stores, selling travel and adventure outdoor apparel and equipment. Kathmandu is a retailer of clothing and equipment for travel and adventure in New Zealand and Australia. Kathmandu Holdings Limited have released their 2019 Business Sustainability Report, which contains information about the company’s corporate social responsibility (CSR) activities. The following information has been extracted from the 2019...

Q1)Case 4-78 Internal Controls Relating to Inventory Recall our discussion relating to internal controls and the...

Q1)Case 4-78 Internal Controls Relating to Inventory Recall our discussion relating to internal controls and the safeguarding of assets of the organization. Inventory is normally one of the largest balances on the statement of financial position. Required: Identify and discuss internal controls relating to inventory. The input in the box below will not be automatically graded, but may be reviewed and considered by your instructor. Q2)Exercise 4-52 Operating Cycle Business activity is often described as being cyclical in nature. Required:...

What are some internal controls for inventory? How do these controls change between industries?

Briefly describe the purpose of internal controls in a company and the importance of internal controls...

Briefly describe the purpose of internal controls in a company and the importance of internal controls as related to cash.

Defining internal control Internal controls

Question Defining internal control Internal controls are designed to safeguard assets, encourage employees to follow company policies, promote operational efficiency, and ensure accurate accounting records.Requirements1. Which objective do you think is most important?2. Which objective do you think the internal controls must accomplish for the business to survive? Give your reason.

You are an auditor studying the internal controls of a client receiving department where inventory purchases...

You are an auditor studying the internal controls of a client receiving department where inventory purchases are received from vendors. You discover that this department merely unloads inventory from trucks and moves it by forklift to the inventory storage area. Clearly answer and explain each of the following: A.) What properly altered document should be sent to the receiving department prior to arrival of any inventory and what is its purpose? B.) What document should be prepared in receiving after...

Describe internal controls, why we have them and give an example of three internal control procedures.

Why are internal controls important in an organization? Describe some internal controls that relate to cash...

Why are internal controls important in an organization? Describe some internal controls that relate to cash receipts and cash disbursements. Please answer in your own words. Do not use outside resources.

What are good internal controls?

Explain the following: a. Concept of internal controls b. Objectives of internal controls c. Major components...

Explain the following: a. Concept of internal controls b. Objectives of internal controls c. Major components of internal controls and key factors of each component d. Limitations of internal controls e. Preventive, detective, and corrective controls f. Methods to document the understanding of internal controls and their advantages and disadvantages

Subjects