Inventory

Objective

Consider changes to AS 2510, Auditing Inventories, to address developments in inventory management processes of companies and increasing use of technology tools by companies and by auditors.

Background

Observation of the company’s counting of inventory has long been performed by auditors. The procedures performed during the observation can be an important source of evidence obtained as part of an audit of a company’s financial statements and, if applicable, internal control over financial reporting. Observation of inventories has been a required audit procedure in the United States for many years.

AS 2510 was adopted as an interim standard in 2003 and provides guidelines for the independent auditor in observing inventories. The auditor’s requirements within AS 2510 are some of the oldest among those currently codified within PCAOB standards. This project is considering potential revisions to existing requirements, taking into account observations from the Board's oversight activities, Standards and Emerging Issues Advisory Group, audit firms' methodologies, academic research, recent reporting trends, the activities of other standard setters and regulators, and information from investors and other stakeholders.

Status

The staff is analyzing relevant information and developing a proposal for the Board's consideration. 

Resources