The audit procedure "observe the client taking a physical inventory count and test the count" is sufficient to determine all of the following except:
A) whether recorded inventory actually exists.
B) whether recorded inventory was properly valued by the client.
C) whether recorded inventory was properly counted by the client.
D) whether client inventory instruction had properly been followed.

Question

Quizplus · Accepted Answer

Observing and testing the physical inventory count can verify existence, accuracy of the count, and adherence to instructions, but it does not determine if inventory is properly valued, which requires additional procedures like price testing and valuation analysis.

The Audit Procedure "Observe the Client Taking a Physical Inventory