Which of the following tests should be performed by an auditor to ensure that all completed inventory is physically moved to finished goods and that the inventory records are updated concurrent with the physical movement?
A) Evaluate whether management's inventory count controls and procedures are appropriate and observe inventory counting to assess whether the procedures are being followed.
B) Inspect the inventory records for evidence that they have been properly adjusted based on the results of the physical counts.
C) For a sample of finished goods inventory items, agree the increase in the finished goods inventory records to a corresponding decrease in work-in-process for the same date.
D) For a sample of finished goods inventory items, agree the increase in the finished goods inventory records to a corresponding decrease in raw materials, purchasing, and payroll.

Question

Quizplus · Accepted Answer

Option C directly addresses the auditor's objective to ensure that completed inventory is moved to finished goods and that records are updated accordingly. It involves tracing the movement from work-in-process to finished goods, which is essential for verifying that physical movements are accurately reflected in the inventory records.

Which of the Following Tests Should Be Performed by an Auditor