Physical verification of inventory is the responsibility of management of the entity. Management is required to establish procedures under which inventory is physically counted at least once a year to ensure existence, condition and support valuation of inventory.
Further, the Auditor needs to comment over the physical verification of Inventory under The Companies (Auditor’s Report) Order, 2016 (CARO 2016). Additionally, SA 500 “Audit Evidence” prescribes that the objective of the auditor is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base the auditor’s opinion
ICAI has come up with the Auditing Guidance on “Physical Inventory Verification – Key Audit Considerations amid COVID 19” on 13th May 2020 for the benefits of its members. For more details, please go through the attached document: ICAI Guidance on Physical Inventory Verification-Key Audit Considerations amid Covid 19
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