Continuous Inventory Counting

Question 1

What are physical inventory counts at year end?

Answer 1

From the viewpoint of the auditor, often the best method

Question 2

Physical inventory counts before or after the year end (audit evidence)

Answer 2

Will provide audit evidence of varying reliability depending on

Question 3

Physical inventory counts before or after the year end (length of time)

Answer 3

Length of time between physical inventory count and the year end

Question 4

Greater the time period in physical inventory counts?

Answer 4

The less the value of audit evidence

Question 5

Physical inventory counts before or after the year end (internal controls)

Answer 5

Business; system of internal controls

Question 6

Physical inventory counts before or after the year end (records of inventory movement)

Answer 6

Quality of records of inventory movements in the period between physical inventory count and the year end

Question 7

What is audit work when continuous inventory counting is used?

Answer 7

Focuses on controls rather than substantive audit work

Question 8

What must auditor nevertheless do at year end?

Answer 8

Need to do some further substantive audit work on completeness and existence at year end