When auditors observe the client counting inventory, they should be careful to do all of the following except
A) inquire about items that are likely to be obsolete or damaged.
B) calculate the unit cost of the inventory items.
C) discuss with management the reasons for excluding any material items.
D) observe the counting of the most significant items.

Question

Quizplus · Accepted Answer

Auditors should not calculate the unit cost of inventory items during the observation of the client counting inventory. The unit cost should be confirmed by obtaining documentation from the client which supports the cost assigned to each item. This is typically done before or after the observation of the inventory count. Therefore, calculating the unit cost during the observation would be unnecessary and distract from the overall objective of ensuring accurate inventory count.

When Auditors Observe the Client Counting Inventory, They Should Be