The extent and timing of an auditor's physical examination of inventory is significantly influenced by the adequacy of the client's perpetual inventory records.

Question

Quizplus · Accepted Answer

The accuracy and completeness of the perpetual inventory records are important for an auditor in determining the extent and timing of physical inventory examination. If the client's perpetual inventory records are reliable and up-to-date, the auditor may perform fewer physical inventory tests. However, if the client's perpetual inventory records are inadequate, the auditor may need to perform more extensive tests and visit the client's site at a different time. Therefore, the answer is true.

The Extent and Timing of an Auditor's Physical Examination of Inventory