Auditing & Assurance Services 6th Edition by Timothy Louwers

Exercise 50

Which of the following procedures would best prevent or detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?
A) Maintain a perpetual inventory of only the more valuable items with frequent periodic verification of the accuracy of the perpetual inventory record.
B) Have an independent accounting firm prepare an internal control report on the effectiveness of the controls over inventory.
C) Have separate warehouse space for the more valuable items with frequent periodic physical inventory counts and comparison to perpetual inventory records.
D) Require a manager's signature for the removal of any inventory item with a value of more than $50.