During the current financial year, the client company began dealing with certain distributors on a consignment basis (goods were delivered to the distributor but not deemed sold until the distributor had on-sold them).Which of the following audit procedures is least likely to bring this new fact to the auditor's attention?
A)Test of cash receipts transactions.
B)Tracing of shipping documents to the sales journal.
C)Observation of physical inventory at the client company's premises.
D)Confirmation of accounts receivable.

Question

Quizplus · Accepted Answer

Observation of physical inventory at the client company's premises is least likely to bring the new fact of dealing with distributors on a consignment basis to the auditor's attention, as this method primarily focuses on the physical count and condition of inventory, rather than the terms of sale or distribution arrangements.

During the Current Financial Year, the Client Company Began Dealing