From which one of the following evidence- gathering audit procedures would an auditor obtain most assurance concerning the existence of inventories?
A) Confirmation of inventories in a public warehouse
B) Written inventory representations from management
C) Auditor's recomputation of inventory extensions
D) Observation of physical inventory counts

Question

Quizplus · Accepted Answer

Observation of physical inventory counts provides the auditor with the most direct and reliable evidence about the existence of inventories. It allows the auditor to physically verify the presence of inventory items and identify any discrepancies between physical counts and recorded quantities. Confirmation of inventories in a public warehouse may provide some assurance, but it may not necessarily confirm the existence of all inventories held by the company. Written inventory representations from management and auditor's recomputation of inventory extensions provide less reliable evidence and do not directly address the existence of the inventory.

From Which One of the Following Evidence- Gathering Audit Procedures