In short
When inventory is material, the auditor attends the physical inventory count, unless that is impracticable, to evaluate management's counting instructions and procedures, observe the count and make test counts.
Key takeaways
- Test counts go both ways: from the count records to the floor (existence) and from the floor to the records (completeness).
- The auditor records cutoff information and notes obsolete or damaged goods.
- If attending is impracticable, the auditor must perform alternative procedures or modify the opinion.
Where it's tested
AUD: Evidence: Types & Procedures — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
The auditor's observation of the client's physical inventory count primarily provides evidence about: