Your Client Plans to Count Inventory at Several Locations on the Same

question 73

Multiple Choice

Your client plans to count inventory at several locations on the same day. No location is material in amount, but the total of inventory is quite material. How is an auditor likely to plan to observe?

• A)Observe all counts at all locations by using the required number of auditors.
• B)Insist the inventory be counted on separate days so the auditor can be present at all locations.
• C)Work with the client to determine which locations to observe.
• D)Observe a sample of locations on a surprise basis.

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Definitions:

Joint Operations

A business activity in which two or more parties share control and management, as well as the benefits and risks of the operation.

Joint Arrangements

Accounting term for arrangements between two or more parties who undertake an economic activity that is subject to joint control.

Equal Interests

A term usually indicating that all parties involved have the same level of stake or share in an asset, liability, or agreement.

Joint Control

The contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.