An auditor's observation procedures for inventory may be performed during or after the end of the period under audit under which of the following conditions?
A)When the client maintains periodic inventory records.
B)When the auditor finds minimal variations in client records and test counts in prior periods.
C)When total inventory has not varied more than 5% in the last five years.
D)When well-kept perpetual inventory records are checked by the client periodically by comparisons with physical counts.

Question

Quizplus · Accepted Answer

The option D states that if the client maintains well-kept perpetual inventory records and checks them periodically by comparing with physical counts, then the auditor can perform the observation procedures during or after the period under audit. This is because the perpetual system allows for a continuous and updated record of inventory, making it easier for the auditor to compare it with the physical count. Hence option D is the best choice. Options A, B, and C do not provide enough relevant information to conclude whether observation procedures can be performed during or after the period under audit.

An Auditor's Observation Procedures for Inventory May Be Performed During