WXY Ltd. is a trading company that maintains a large quantity of inventory in its warehouse. During the year, some inventory items belonging to the…

Completeness Assertion for Inventory requires that only inventories held by entity have been recorded in the financial statements and do not include any inventories that belong to third parties but does include inventories owned by the entity and lying with a third party. Audit Procedures to Verify Completeness of Inventories (i) Perform analytical procedures (comparison tests with industry averages, budgets, prior years, trend analysis, etc.). Compute inventory turnover ratio (COGS/ average inventory)Perform vertical analysis (inventory/ total assets)Compare budgetary expectations vis-à-vis actuals (ii) Examine non-financial information related to inventory, such as weights and other measurements. (iii) Perform purchase and sales cut-off tests. Trace shipping documents (bills of lading and receiving reports, warehouse records, and inventory records) to accounting records immediately before and after year-end. (iv) With respect to tagged inventory, perform tests for omitted transactions and tests for invalid transactions. (v) Verify the clerical and arithmetical accuracy of inventory listings. (vi) Reconcile physical inventory amounts with perpetual records. (vii) Reconcile physical counts with general ledger control totals. (viii) Reconcile inventories which belong to client but are held with third parties like transporters, warehouses, port authorities etc. (ix) Goods received on consignment basis have been properly segregated from other items of inventory.