Audit Reports for Inventory Costing Documentation Cycle

Any accounting system calls for inventory cost flow control; these control measures implies that there must be an audit reports to assure the followings:

  • Assure that purchases, production, and sales transactions of inventory are carried out according to the planned documentation cycle.
  • Assure that the system is calculating average costs properly.
  • Assure that the system is costing all inventory output entries with the right historical cost.
  • Assure that Inventory as in warehouses and inventory as an account are always the same at any given point, by assuring their equality for every transaction.
  • Describing how costs has flown through the movements of an SKU or groups of SKUs according to the following equation:
    Opening stock costs and quantities + Purchases (or production) costs and quantities = COGS (Or imbursement to manufacturing) costs and quantities + Closing stock costs and quantities.