An auditor selects a random sampling of tag numbers and identifies the tag with that number attached to the actual inventory. The purpose of the procedure is to
A) obtain proper cutoff information.
B) uncover the inclusion of nonexistent items as inventory.
C) determine if the client has adequately priced the inventory item.
D) verify that the client has not changed the recorded counts after the auditor left the premises.

Question

Quizplus · Accepted Answer

The purpose of selecting a random sampling of tag numbers and identifying the tag with that number attached to the actual inventory is to uncover the inclusion of nonexistent items as inventory. This helps the auditor verify the accuracy of the physical inventory count and identify any potential overstatement or understatement of inventory. This procedure does not address obtaining proper cutoff information, determining adequate pricing, or verifying that the client has not changed recorded counts.

An Auditor Selects a Random Sampling of Tag Numbers and Identifies