There are no hard and fast rules for auditing, which can be prescribed for all the countries. These rules can be different for different countries according to their needs and cultural settings. According to ICAEW (2002) with all the contrasts present in the rules and regulations of different countries emphasis is given to generic auditing principles of responsibility, accountability, transparency and fairness.
"Inventory controls are designed to ensure the safe custody. Such controls include restriction of access documentation and authorisation of movements regular Independent inventory counting and review of Inventory condition." (BPP, 2008)
Recording of Inventory: In order to effectively control the Inventory on the basis of book inventory it is important to segregate the duties of custody and recording of inventory. It is important to check if the pair of shoes are checked and recorded at their reception. Inventory issues are supported by appropriate documentation. It is also important to maintain Inventory records such as Inventory ledger, Bin cards and Transfer records. The physical counts of the inventory should be recon ciliated with the computed amounts. The transactions having high values should be analyzed. The inventory items should be divided into different divisions according to group, location, type, etc. The inventory age should be calculated by the date of receipt.
Sales System Control:
The sales transactions should be checked according to the prices, quantities, extension and totals in the sales register. There is not any evidence of issuing the invoices to the customers. The sales transactions should also be checked according to the sequential numbers of blank invoices and regular sequential checks.
2. Test of Control for Sales System:
The sample of the inventory movement records should be taken and cross checked with the goods received and dispatched according to the records. The movement of the inventory should be authorised by the management of the outlet. Goods received and goods dispatched note should be randomly selected and cross checked with the movement of goods. Although there is not any evidence of sales invoice being issued to the customers, there must be check on the prices, quantities, extensions and totals on invoices and credit notes. The sequence of inventory records should also be checked. Inventory counts should be tested and checked out from time to time during the period and confirm. All discrepancies between the computer records and actual figures should be fully investigated. All the discrepancies should be signed off by the senior manager of the outlet. Obsolete damaged and slow moving goods should be marked accordingly. The security arrangements for the inventory should be observed in order to checkout the gaps in the security procedure. The inventory which is held should be reviewed