The New Nuts and Bolts of Auditing: Innovation in Inventorying Inventory

• In Event: Publications and Pedagogy

Abstract

The case explores the regulatory and technical guidance related to auditing inventories and asks you to consider using automated systems to aid in the traditional count of inventory. You are asked to assess management’s assertions related to quantities of inventory on hand in both a manual and computerized context. Specifically, you are provided with an opportunity to perform a hands-on count of inventory from an actual parts department of a car dealership. In addition, you are introduced to automated counting software to aid in the audit of inventory. The use of such software may result in added accuracy of inventory counts, increased timeliness of reporting, increased efficiency in fieldwork, decreased travel demands and disruption to the client, and lastly, more tangible documentation and audit evidence. You are also introduced to machine learning, the related deficiencies, and the need to exercise professional judgment to identify software mistakes that result in over and undercounting items, emphasizing the need for subsequent review when relying upon automated software in the audit process.

Authors

• Jamie Hoelscher, Southern Illinois University - Edwardsville

• Drew Gross, SIUE

• Brad Reed, Southern Illinois University - Edwardsville

• Gregory E Sierra, Southern Illinois University - Edwardsville