Your client counts inventory three months before the end of the fiscal year. Internal controls over inventory are excellent. Which procedure is not necessary for the inventory roll-forward?
A)Check that shipping documents for the last three months agree with perpetual records.
B)Tracing receiving reports for the last three months to perpetual records.
C)Compare gross margin percentages for the last three months.
D)Request the client to recount inventory at the end of the year.

Question

Quizplus · Accepted Answer

Requesting the client to recount inventory at the end of the year is not necessary if internal controls over inventory are excellent and the inventory was already counted three months before the end of the fiscal year. The other procedures (A, B, C) help in verifying the accuracy of the inventory records during the roll-forward period.

Your Client Counts Inventory Three Months Before the End of the Fiscal