Importance of inventory audit to incrase the credibility of financial accounting information

Abstract

Inventory auditing requires special attention because it is one of the most
important activities that an entity needs to accomplish at the end of each
financial year after the inventory process is completed. The difficulty of
inventory auditing is given by their increased weight in the balance sheet, the
many locations where they are stored, the diversity of stocks by nature, and the
multitude of valuation methods. This activity has an impact on the outcome of
the exercise through the objectives to be achieved: accuracy, evaluation,
existence, separation of exercises, completeness, optimization of costs and stock
levels. By inventory audit, we monitor the recording of all accounting operations
(inventory acquisition, exit, inventory) and prevent any possible malfunction,
that is, the activity by which we identify and examine the stocks in order to
detect the irregularities between the accounting statements provided by the
accounting and the inventory. Proper inventory has direct implications on the
outcome of the activity, but also on the entity's economic performance.