The new nuts and bolts of auditing: Technological innovation in inventorying inventory

Andrew Gross, Jamie Hoelscher, Brad J. Reed and Gregory E. Sierra

Journal of Accounting Education, 2020, vol. 52, issue C

Abstract: The case explores the regulatory and technical guidance related to auditing inventories and asks you to leverage technology by utilizing 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 asked to perform a count of inventory as part of the audit of a retail automotive parts company. As part of the audit, you are introduced to automated counting software, which aids in the audit of inventory. The use of such software can improve the accuracy of inventory counts, increase the timeliness of reporting, increase efficiency in fieldwork, decrease travel demands and disruption to the auditee, and, lastly, provide more 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, further emphasizing the need for subsequent review in the audit process.

Keywords: Auditing inventories; AS 2201; AS 2510; Automated counting software; AACSB Standard A5; Professional judgment (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:joaced:v:52:y:2020:i:c:s074857512030035x

DOI: 10.1016/j.jaccedu.2020.100679

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