Physical Inventory Observation Checklist

Objectives:
● The objectives of the physical inventory observation include determining that (1) the inventory exists, (2) the methods of inventory taking are
effective in obtaining accurate counts, and (3) the inventory is in a usable and salable condition in the normal course of business (e.g., not
damaged or obsolete).

Assertions: C, A, CO, E/O, V

Instructions:
● This checklist is organized to facilitate documentation of information obtained and audit techniques usually employed during a physical
inventory observation, including tests of perpetual inventory records.

● The checklist is not an exhaustive list of considerations for all observations. It should be supplemented by additional procedures whenever
appropriate.

● This checklist is organized to cover three main stages of a physical inventory observation:

1 . Initial Procedures - includes evaluation of inventory count instructions and initial inquiries of those in charge of the count;
2. Execution- test counts results tables with corresponding specific questions, and
3. Overall Conclusions - documention of conclusions reached regarding the effectiveness of the entity's inventory count procedures and
Entity's assertions about the quantities and physical condition of the inventories.
● This checklist should be prepared by the JACK count attendees responsible for a location or department count and be completed before
leaving the inventory location.
 This checklist should be prepared by the JACK count attendees responsible for a location or department count and be completed before
leaving the inventory location.

Type of Count

Annual(Wall to Wall) Physical Inventory Observation

JACK test counts are to be performed for following types of inventory (select each that applies):
Raw materials
Work in Progress
Finished goods
Consumables

Coverage of inventory:
Nelspruit 1700 #DIV/0!
Richardsbay 1300 #DIV/0!
-

Links to tesing:
'General information'!A1
'Initial ISA procedures'!A1
'Existence Testing'!A1
'Completeness testing'!A1
Conclusion!A1
thods of inventory taking are
urse of business (e.g., not

oyed during a physical

ional procedures whenever

of the count;

y count procedures and

and be completed before

and be completed before
General Information

COUNT INFORMATION

Entity

Division (if applicable) N/A

JACK Count Attendee(s)

Location or Department
N/A
(if applicable)
Count Address

Type of count Annual (wall to wall) Physical Inventory Count

Entity inventory count date(s)

JACK inventory observation date

Evaluation of entity's count instructions to be performed by

General Comments, if applicable (e.g. specific details of the client's location and details of any specific personal identification requirements, e.g. JACK
at previous count(s); details of any specific risks of fraud and/or error that may be relevant to this count observation; any requirements for specialist clo
accessories)

JACK Contact(s) for issues arising during the observation

Primary Contact

Name and Engagement role

Telephone Number

Email Address

Secondary Contact

Name and Engagement role Manager

Telephone Number 013 836 8875

Email Address Manager@JACK.co.za

Test Count Instructions JACK Test counts to be performed

Type of inventory Total Tag/Sheet to Floor Floor to Tag/Sheet

Raw materials

Work in Progress

Finished goods

Other (provide details in General Comments below)

Total 0 0 0
How to select count items (e.g. target test high value, other risk)
How to select count items (e.g. target test high value, other risk)

Expected entity count techniques (e.g. physical count, weighing, other measurement techniques)

Where specific counting, weighing or measurement techniques are applied (e.g. as documented in entity count instructions), provide details of any acceptable difference or threshold
dentification requirements, e.g. JACK identification card; reference to any other communication; details of any issues identified
on; any requirements for specialist clothing such as hard hats or boots or any restrictions on particular type of clothing or

Client representative(s) in charge of inventory count

Primary Contact

Name T. Mbowena

Telephone Number 013 775 6453

Email Address T.mbowena@papyrus.co.za

Secondary Contact (if applicable)

Name N/A

Telephone Number N/A

Email Address N/A

Initial procedures Checklist

Area Requirement

Discuss the procedures the auditor should complete when attending the entity’s physical inventory counting using the categories listed belo

Entity Count Instructions Does entity management issue written inventory count instructions to their count teams?
Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Entity Count Instructions

Inventory Types & Organization Have inventory items been arranged in an orderly manner (e.g., properly packed and binned) prior to the inventory cou
to facilitate the counting ?
Inventory Types & Organization

Inventory Types & Organization Have obsolete, special order, damaged, over stock or slow moving items been designated on the tags/count sheets ?
Inventory Types & Organization

Personnel Have the entity's inventory count personnel been briefed on inventory count procedures, i.e. inventory count instruction
provisions?
Personnel
Personnel
Personnel
Personnel

Cut-off Has production been suspended during the count process ?

Cut-off
Cut-off

Cut-off

Counting methods Are all quantities to be determined by actual physical counts ?

Counting methods

Counting methods
Counting methods

Counting methods

Counting methods

Counting methods
Tag/Sheet Control
ding the entity’s physical inventory counting using the categories listed below.

en inventory count instructions to their count teams?

in an orderly manner (e.g., properly packed and binned) prior to the inventory count
ed, over stock or slow moving items been designated on the tags/count sheets ?

sonnel been briefed on inventory count procedures, i.e. inventory count instructions

ng the count process ?

y actual physical counts ?

Count Results - Tag/Sheet to Floor - Raw Materials

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of

Item Name
number / ID number Measurement

Count Results - Tag/Sheet to Floor - Work in progress

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1

Count Results - Tag/Sheet to Floor - Finished goods

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1
2
3
4
5

Count Results - Tag/Sheet to Floor - Consumables

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1
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 DOCUMENTATION OF TESTING

Location (e.g., areas, aisle or Difference

Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)
Count Results - Floor toSheet - Raw Materials

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of

Item Name
number / ID number Measurement

Count Results - Floor toSheet - Work in progress

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1

Count Results - Floor toSheet - Finished goods

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1
2
3
4
5

Count Results - Floor toSheet - Consumables

JACK TEST COUNTS PERFORMED

Test count Item Reference Unit of
Item Name
number / ID number Measurement
1
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 DOCUMENTATION OF TESTING

Location (e.g., areas, aisle or Difference

Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)

DOCUMENTATION OF TESTING
Location (e.g., areas, aisle or Difference
Entity Count JACK Count Evaluation of difference / Notes
shelf location) (+ / -)
Overall Conclusions

The physical observation of the Papyrus's stock count was performed on 1 January FY at Nelspruit (81 % of inventory is held in Nelspruit, we therefore
The adjustment report will be obtained the day after the count to ensure that no other variances were posted after the JACK count was performed. We
numbers to verify our count against. Describe our procedures to determine that inventory items are not added subsequent to our observation procedure
The inventory count observation covered majority of inventory for which Papyrus is responsible.
The warehouse physically safeguarded by security gates at the entrence of the premise and no one can enter the premises if not cleared.
All items to be traced to final listing for the location which was obtained after the count.
Nothing came to our attention which was inconsistent with our initial inquiries of the person with overall responsibility for the count, or that was potentia
count did not proceed in an orderly, controlled and effective manner.
 held in Nelspruit, we therefore have sufficient comfort over the existence of inventory)
ACK count was performed. We also obtained the entities count
nt to our observation procedures.

ses if not cleared.

the count, or that was potentially indicative that the inventory