How to assess whether the company’s inventory is obsolete?
This audit procedure is very difficult and is usually quite specific to your client. For example, if you are auditing a company that sells luxury items, one way you could test inventory obsolescence is see many times the item has sold in the last 12 months.
If the company has 100 pairs of name brand sunglasses in inventory, but there hasn’t been a single sale in the last 12 months, perhaps that item has gone out of style and should be considered obsolete by the company.
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