While it’s a possibility that the lockdown restrictions may be lifted in early December, there may still be some reluctance among audit personnel and among staff in client entities, meeting in person, thereby making remote stocktaking of prime consideration.
Five things to consider in planning for remote inventory counts are:
- Drones or remotely controlled robots, might help with your inventory testing in some cases, but the cooperation of client personnel and safety restrictions on flying of drones need to be taken into account and will be heavily influenced by the geography and physical surroundings of where the stock is located.
- Control of the drone footage and who is in control of how and where the cameras are directed needs discussed with clients in advance. If the auditor is not in control, then there is a risk that the recorded footage could be manipulated.
- Completeness is one of the main audit assertions and the auditor needs to consider this when planning a remote stocktake. Assess whether the cameras will allow you to see all of the inventory at any one point in time and also consider the risk that certain items could be kept out of view or are moved around behind the camera’s view and might be omitted from the stock count.
- Assessing the condition of the inventory is another critical matter. Video cameras with strong resolution are necessary so that inventory damage can be better assessed. In some cases, photographic images of stock may be more accurate in assessing damaged or obsolete inventory.
- Selecting samples for testing is another critical matter including the consideration of increasing sample sizes for the added risks mentioned here. Selecting items only during the count itself (with no advance notification ) and then identifying the items to be tested from floor to sheet and sheet to floor can help to reduce the risk of manipulation
Given these technology constraints, staff with prior experience of inventory counts will be better able to handle the unexpected, and ideally should be accompanied by other experienced personnel.
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