Splendid Paints Buys Much of Its Specialist Paint from Overseas

Splendid Paints buys much of its specialist paint from overseas. Purchase orders have to be made six months in advance and goods can take up to two months to be delivered. The audit risk in this case is:

A) The business might run out of paints thus causing inventory shortages with a consequent effect on the financial results
B) Valuation of inventory might be difficult in establishing correct costs at the time it was delivered
C) The cut off is difficult to establish i.e. there is a difficulty of knowing what is in inventory at the period end and what accruals to include in respect of that inventory.
D) The value of Inventory might be overstated or understated due to foreign currency movements