An auditee may count the inventory at a date other than the balance sheet date.Which of the following is necessary if the auditor plans to observe the count on a non-balance sheet date?
A)Complete recounts by independent teams must be performed.
B)Perform additional roll-forward or roll-back procedures for the period between the count date and balance sheet date.
C)Unit cost records must be integrated with production accounting records.
D)Inventory cannot be a material amount.

Question

Quizplus · Accepted Answer

If the auditor plans to observe the inventory count on a non-balance sheet date, they must perform additional roll-forward or roll-back procedures to ensure that the inventory balance is accurately stated for the balance sheet date. This is necessary because there may be additional inventory transactions between the count date and the balance sheet date that could affect the accuracy of the balance sheet. A complete recount by independent teams may be necessary if the auditee has a history of unreliable inventory counts or if the inventory is material. Integrating unit cost records with production accounting records may be necessary for auditing the accuracy of the current cost of inventory, but it is not directly related to the observation of the inventory count on a non-balance sheet date. The materiality of the inventory balance does not determine whether or not additional procedures are necessary for observing the inventory count on a non-balance sheet date.

An Auditee May Count the Inventory at a Date Other