 the original owner of the inventory. So with regards to completeness, we want to consider the proper allocation of the inventory to the records. Then we have the authorization, we're going to review authorized production schedules. We want to basically review the authorization process, review and test procedures related to developing inventory levels and those used to control them. Then we have the assertion of accuracy. So we're considering the assertion of accuracy, review and test procedures related to taking physical inventory. So they should be taking a physical inventory. Of course, this is one of the major things with regards to audit that will kind of consider many of the new auditors will go out and the company will actually do a physical inventory typically towards the end of the year and the auditors get to go out there and count, you know, the inventory and the physical inventory, which is always a exciting time. And then we have the review and test procedures to develop standard costs. So we'll review and test the procedures that develop those standard costs. It's kind of like estimated costs. And this would be in like a production type of process, review and test variance reports. So the difference between the standards and what actually happened again, more of something that would happen if we're making the inventory, producing inventory, as opposed to purchasing and selling it review and test procedures for detecting obsolete, slow moving and excess quantities. So we want to see the procedures for that because if something's obviously obsolete or slow moving, or if we have excess quantities, it might well be the case that we're overvaluing the inventory, given the fact that some of it is old. And note that within the audit process, this could be a real problem for us because we as the auditor may not be experts in valuing inventory. So when it comes to the question of, well, is this piece of inventory now below what the cost is, should we write it down? We don't really have the expertise to do that. We might need experts to come in if we're valuing something like clothing or something like that or carpets or something like if it's old inventory, how do we know what the value of the inventory will be? Is it still valued correctly? If it's been there for a long time, we may need some expert help in order to value some inventory that might be slow moving inventory. Review the reconciliation of perpetual inventory to the general ledger control account. So you'll recall the perpetual inventory system. If we're talking about a publicly traded company, they're probably recording the inventory as sales happen. We want to be comparing the perpetual inventory system to the GL, the general ledger, the control and account. Then we have the cutoff, the assertion of the cutoff testing. And that's going to be the end of the year. You'll recall the end of the year type of information and what are the controls related to it to make sure things are recorded in the proper time period. Review and test procedures related to processing inventory that is on receiving reports into the perpetual records. So again, the perpetual records, those records that we would be tracking on a perpetual basis with relation to inventory. So we want to consider then the receiving reports and then how they're going to relate to the perpetual records. Why? Because when should we be recording the inventory into the system at that point in time that we have received it often time. So the receiving reports then often being the triggering point and we want to make sure that there's the proper controls over those. Again, you might think this sounds like something we did in the purchasing process. You're right, because there's going to be overlap within the purchasing process and the inventory, the inventory process, because many of the things that we purchased quite possibly be one of the major things we purchased being, of course, inventory. Review and test procedures for removing inventory from the perpetual records because of shipment of goods. So then, of course, the other side of things when we make sales, we have the review of the perpetual inventory records going down because of the shipment. So again, we want to test the thing that should be triggering the inventory to be decreasing. When should it be decreasing? When we completed the work in accordance with revenue recognition, when we no longer have ownership of the inventory, when does that typically happen? With a shipping happens when the inventory leaves, that's when we did the job. And therefore, that's what we want to tie out to the cutoff testing to make sure that the inventory going out lines up in the proper time period. And then we have the assertion of classification, review the procedures and forms for inventory classification. Next, we have presentation review inventory reports, general ledger and chart of accounts for proper aggregation and disaggregation. We're going to review procedures and forms used to create inventory disclosures. So how are they going to make those inventory disclosures? And then we're going to review disclosure checklist and related disclosures for reliance on completeness. So you'll note again, that as we think about these controls, some of them are budding up against some of the other controls we have tested, as we consider other processes, those being the purchasing process in particular, as well as the sales process as part and possibly human resources and payroll, to some degree as well. So as we consider these individually, note they are interrelated in some degrees, and we're going to be testing the controls of one in some to some degree to some component. As we do the other, we want to take that into consideration when we do the planning process. Now we're going to be considering inventory transactions, looking first at the assertion of occurrence. So the primary worry of the auditor is that every record recorded inventory transaction actually occurred. So that we're thinking about the inventory transactions, if the inventory transaction was recorded, we're worried that it was that it actually happened that the actual occurrence happened that was recorded. So the thing we're thinking about with occurrences, well, what if they just made a transaction that didn't actually happen? Did it actually occur? Is there something behind the transaction that should have caused the transaction? The auditor will also be worried that goods may be stolen. It's another concern within occurrence. The primary tests of controls then will be review and observation. Those are the primary tests of controls used to test the control for procedures. Now we're going to test inventory transactions with the assertion of completeness. With regards to completeness, the main control procedures relate to the recording inventory that has been received. So when we're considering completeness, have we recorded the inventory that has been received? Because now we're considering, of course, with regards to completeness, the end thing that we have, the end financial statements we can consider, are they including all that they should be including with regards to inventory? In other words, are there inventory that's not being recorded in terms of the transaction or isn't being a transaction that's not being processed within the end procedure? Now this is going to be something that's going to be closely related to the purchasing process. So something that we're probably going to be testing within the purchasing processing can basically review the procedures within the purchasing process with regards to the assertion of completeness and the receiving of the inventory and recording the receiving of the inventory. Then we have authorization of inventory transactions. We're considering authorization with regards to inventory transaction. Primary worry here is the unauthorized purchase of product of production activity that may cause excess levels of certain types of finished goods. The next assertion with regards to inventory's transaction is accuracy. Inventory transactions not properly recorded can result in misstatements that directly affect the amounts reported on the financial statements. So when we're considering the assertion of accuracy with regards to inventory, it's really important of course because the inventory in and of itself is generally something that's going to be material and if something is inaccurately reported there's going to be a direct effect on the financial statements and of course we are here to give an opinion on the accuracy of the financial statements. Inventory purchases need to be recorded at the correct price and the actual quantity received. So we need to make sure that the inventory that's that's going into the process is recorded one at the correct price and the correct quantity. Inventory shipped must be correctly recorded in cost of goods sold and the related revenue recognized. So when we ship the inventory recall of course that's the point in time that we would ship it out because we sold it. There's going to be two components to that when when we have the sales process happening right that the sale we have the revenue component revenue is going up and then we have accounts receivable or cash that would be going up as well. Then we have the inventory area that we're kind of thinking about here inventory of course would then be going down inventory would go down and revenue should be recognized typically at this at the point in time when the work is completed when we and on the expense side and the cost of goods sold when we have used the expense in order to help us to generate revenue matching principal expense recognition revenues recognized when we did the work in order to generate the revenue both those should be happening at the point in time when we ship the inventory typically cost of goods sold the expense being recorded inventory going down at that point in time then we have the inventory transactions assertion of cutoff so the cutoff into the year cutoff inventory transactions that are recorded in the wrong period may affect many different accounts such as or like inventory purchases cost of goods sold so it's quite possible that if the cutoff is wrong if we have transactions at the end of the year that are are being applied to the wrong place then that's going to affect inventory that's going to affect cost of goods sold that could affect purchases so that could have have a substantial impact on on the financials and that's something that we're going to basically want to be considering as of the end of the year looking at those types of transactions considering and testing whether or not the transactions are being recorded in the proper time period also note if there was going to be something such as fraud or some kind of deception and like say someone wanted to look good for me