The client has a perpetual inventory system,and takes an inventory count of 100 items every two weeks for comparison to the perpetual records.There are no plans to have a complete year-end physical count of inventory.How will the auditor conduct the audit of physical inventory?
A)Select an attribute sample of items to count at the year end for comparison to the perpetual records.
B)Select a dollar unit sample of items to count at the year end for comparison to the perpetual records.
C)Use roll-forwards to carry forward the inventory records from the cyclical counts for an attribute sample of inventory items.
D)Conduct test counts and compare the perpetual records with a cyclical count during the interim audit.

Question

Quizplus · Accepted Answer

Since there is no plan for a complete year-end physical count, the auditor should conduct test counts and compare the perpetual records with a cyclical count during the interim audit. This will help ensure that the perpetual records are accurate and reliable. The other options, such as selecting a sample of items for comparison or using roll-forwards, may not be as effective in verifying the accuracy of the perpetual records.

The Client Has a Perpetual Inventory System,and Takes an Inventory