We received an e mail from one particular of our visitor asking the following query: what might be the high risk area with the high-end fashion retail industry (i.e. which account assertion has the high risk).
Answering these query in short just before proceeding to detail evaluation:
Measurement/ Valuation of Inventory, Stock Provision and Valuation Completeness
In high-end fashion industry, the products are exclusive plus the inventory turnover rate is reasonably low for many of the products. For an example, a 500,000 US dollar watch could take greater than a single year to promote the goods to end-user.
How should we assess the inventory specifically for lower inventory turnover? With these we pushed the management to categorize the goods into various classes of inventory, & assessing the historical sales trend of the certain class to create and understanding with the inventory of the client. Moreover, the in-depth understanding with the stocks delivers an affordable ground to gauge the provision for stocks as at currently.
Furthermore, we checked to subsequent sales to verify in the event the stocks have already been subsequently sold immediately after year ending to assess that the inventory have already been sold at a selling price no less than its high price . And verifying the inventories that are valued at ‘lower of cost or net realizable value’.
