If there is a risk that management's assertion that recorded inventory exists is not valid,the auditor will:
A)Spend less time testing for the existence of recorded inventory.
B)Spend more time testing for the completeness of inventory.
C)Not adjust their audit strategy.
D)Spend more time testing for the existence of recorded inventory.

Question

Quizplus · Accepted Answer

If there is a risk that management's assertion regarding inventory existence is not valid, the auditor needs to increase the testing of recorded inventory's existence. Therefore, the option D, "Spend more time testing for the existence of recorded inventory" is the best choice. The risk of overstatement of inventory by recording non-existing inventory is high, which can lead to financial statement misstatement. Therefore, the auditor needs to test the existence of recorded inventory significantly to ensure the accuracy of inventory reporting.

If There Is a Risk That Management's Assertion That Recorded