The existence of an adequate storeroom with a competent custodian in charge results in the orderly storage of inventory and can protect inventory from theft and misuse.How would an auditor assess these controls?
A)observation during the audit and inquiry of the accounting staff
B)inquiry of the accounting staff and inspection of theft statistics
C)observation during the inventory count and inquiry of inventory personnel
D)inspection of inventory damage statistics and inquiry of inventory personnel

Question

Quizplus · Accepted Answer

The best way for an auditor to assess the controls surrounding the storeroom and its custodian is to observe the inventory count and inquire of inventory personnel. This will allow the auditor to physically see the condition of the storeroom, observe how inventory is being handled, and ask specific questions about the role of the custodian in protecting inventory from theft and misuse. This is a more direct and reliable way to assess the effectiveness of these controls compared to relying on statistics or accounting staff inquiries.

The Existence of an Adequate Storeroom with a Competent Custodian