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Industries/Manufacturing

Audit file prep for manufacturers.

Inventory is the largest and most judgmental balance in a manufacturer’s file. The standard pack gives your team a tied-out starting point, so its time goes to the judgments.

What every file gets

The pack is the same on every file, in every industry. It is built from the client’s QuickBooks books and the documents your firm sends.

Lead schedules
Every trial balance account classified to a US GAAP line, in Excel and PDF, with prior-year final, per-books, adjustment and final columns.
Tie-out of the draft
The client’s draft statements re-added and every line agreed to the trial balance. Differences are findings about the draft, never silent changes to the books.
Fixed-rule ledger checks
Revenue cutoff, duplicate payments, journal entry testing, split purchases, opening balances, flux analysis, bank reconciliation and more. Each finding names its rule.
Proposed entries
A finding cites the evidence line and the standard, and proposes an adjusting entry. Nothing is posted to the books.
Review trail
A reviewer decides each finding and records a reason. Initials and dates travel with the working papers.
Inputs received and missing
The file shows what arrived and what did not, tied to the findings that need it.

Where the judgment sits on a manufacturer file

These areas decide the file. Industry-specific schedules are not part of the standard pack. Whether CORAA drafts any of them for a given file is agreed on the intake call before anything is uploaded, and what is not agreed stays with your team.

Areas your team will spend its time on

  • Inventory roll
  • Costing and variances
  • Reserve and NRV
  • Count sheet tie-out
  • Fixed assets and leases

Typical PBC items from the client

PBC items from the client

  • Inventory listing by item, quantity and cost
  • Year-end count instructions and completed count sheets
  • Bill of materials and standard cost update documents
  • Purchase price and overhead variance reports
  • Supplier and customer concentration reports
  • Debt agreements and covenant calculations

Where manufacturer files go wrong

Standards that drifted
Standard costs not updated while prices moved leave large variances parked in inventory.
Reserves set by habit
A reserve unchanged from last year while sales slowed.
Cutoff at the dock
Goods shipped before year end but invoiced after, or received but not booked.

What stays with your firm on manufacturer files

Fulfilled by CORAA means CORAA AI drafts the file and CORAA Network reviewers clear every flag, with a line-by-line review log. Your manager and partner then review it as they would any staff-prepared file. Your firm keeps the client, the engagement letter, the professional judgment and the signature.

CORAA never signs, issues or reports on anything, and never contacts your client unless you ask us to. Your first audit is free, so you can judge the pack on a real file. After that the fee is flat, set by entity size, and messy books are included.

Free resources for this work

Guides, templates and calculators on this site that cover the same ground. All free to use.

GuideManufacturing Audit Guide: Standard Costing and Overhead AbsorptionGuideManufacturer Inventory Audits: Obsolescence Reserves and Net Realizable ValueGuideInventory Observation and Inventory Audit Procedures: Counts, Cutoff and the Inventory ReserveGuideInventory Costing Under ASC 330: FIFO, Average Cost, LIFO, Overhead and Net Realizable ValueTemplateAudit Program: InventoryTemplateInventory Observation Memo and Test Count Sheet (AU-C 501)TemplateLower of Cost or NRV Inventory Test (ASC 330)ToolInventory Reserve Calculator: Obsolescence and LCNRV (ASC 330)ToolFIFO, LIFO and Weighted Average Inventory Calculator

Questions firms ask

No. Observation is an audit procedure performed by your team.
Messy records are included in the flat fee. What the file can rest on is settled on the intake call, and the file shows which inputs arrived and which are missing.
No. Whether the reserve is adequate is your reviewer’s call.
Number of entities is one of the inputs that sets the flat fee. The intercompany elimination worksheet on this site is a free template.
Your first audit is free. After that, a flat fee per audit, set by entity size. Messy books are included, never a surcharge.

Sources: FASB ASU 2015-11, Inventory (Topic 330) · FASB ASU 2016-02, Leases (Topic 842)

More in industries
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For US CPA firms

Join the CORAA waitlist

CORAA AI drafts audit working papers from your client’s QuickBooks books and does the first pass: lead schedules, tie-out, memos, draft notes and letters. CORAA Network reviewers clear every finding. Your firm reviews and signs.

  • First audit free, so you can judge the quality on a real file
  • Flat fee by entity size; messy books included
  • We work only with CPA firms, never their clients
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