When part of the client's inventory is in a public warehouse or in the possession of other outside custodians, the auditor does not need to observe a physical count of the inventory if a written confirmation is obtained directly from the inventory custodians.

Question

Quizplus · Accepted Answer

If written confirmation is obtained directly from the inventory custodians, the auditor does not need to observe a physical count of the inventory. This is because the inventory custodians should have performed their own physical counts, and the written confirmation serves as sufficient evidence of the existence and valuation of the inventory.

When Part of the Client's Inventory Is in a Public