Will the auditor attend our stock count and check our fixed assets?

Stock (inventory) HKSA 501 deals with attendance at physical inventory counting.

• Where stock is material, the auditor normally observes the count at or near the year-end.
• If attendance is impracticable, the auditor must carry out alternative procedures to obtain evidence on existence and condition.
• If attendance is impossible due to unforeseen circumstances, the auditor may count on another date and test movements in between.

What to prepare

• A count plan, count sheets and the final listing, reconciled to the accounting records.
• Evidence of cut-off (last receipts and shipments).
• Stock held by third parties or in other locations.

Fixed assets Expect testing of:

• Additions against invoices or contracts, and ownership.
• Depreciation rates and calculation.
• Disposals, write-offs and impairment signs.
• Leases and right-of-use assets, where the framework requires them.

If you cannot support a number Where the auditor cannot get enough evidence for a material balance, the report may be qualified or disclaim an opinion (HKSA 705).

The amount of work depends on the auditor's judgment about risk and materiality.