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Testing of Operating Effectiveness of Internal Control
Testing of Operating Effectiveness of Internal Control
Inventory’s materiality demands robust control testing to assess operating effectiveness, influencing substantive procedure extent.
Tests of Controls over Inventory
Tests of Controls over Inventory
Tests vary by entity (e.g., manufacturers vs. retailers). Examples include observing secure areas (existence), inspecting requisition sequences (completeness), and reviewing cost sheets (valuation).
Tests of Controls in a Production Process
Tests of Controls in a Production Process
Manufacturers require additional tests, like observing inventory movement authorization and inspecting labor cost allocations, focusing on internal documentation reliability.
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