When an auditor observes that personnel who are responsible for physically counting inventory are not following the inventory instructions, the auditor should
A) contact a client's supervisor to correct the problem.
B) modify the client's physical inventory instructions.
C) not discuss the problem with client's supervisor in order to maintain independence.
D) assign audit staff to the inventory count.

Question

Quizplus · Accepted Answer

The auditor should contact a client's supervisor to correct the problem because it is the responsibility of the client to have effective inventory controls and accurate financial statements. By contacting the supervisor, the auditor is helping the client to correct the issue and prevent any potential material misstatements in the financial statements.

When an Auditor Observes That Personnel Who Are Responsible for Physically