An auditor generally tests the segregation of duties related to inventory by:

Question

Quizplus · Accepted Answer

Choice "A" is correct. Tests of controls that do not provide documentary evidence (such as those controls related to segregation of duties) are generally tested by personal inquiry and observation by the auditor. Choice "B" is incorrect. Test counts and cut-off procedures are effective substantive tests of inventory (existence assertion). Choice "C" is incorrect. Analytical procedures and invoice recomputation are substantive tests performed by the auditor to gather evidence regarding management's assertion of valuation of the inventory. Choice "D" is incorrect. Document inspection and reconciliation generally is not helpful in testing segregation of duties, since even appropriate segregation often does not provide documentary evidence.

An Auditor Generally Tests the Segregation of Duties Related to Inventory