A company has sent semi-finished goods to third parties for further processing. While performing a…
A company has sent semi-finished goods to third parties for further processing. While performing audit how can check the same ?
Goods which are in the processing or semi finished goods are assets of the company. So, company has to show it as an closing inventory. While conducting audit, auditor has to consider the following things.
(i) Ensure that semi-finished goods have been included for valuation of inventory since these belong to the company.
(ii) Obtain confirmation letters from such third parties in respect of quantity lying with them at the end of the year.
(iii) Examine the basis of valuation.
(iv) Check the disclosure requirements as per the company act and accounting standard.
