Observation of a Client's Inventory Is a Presumptively Mandatory Audit

question 63

Essay

Observation of a client's inventory is a presumptively mandatory audit procedure.
a.What part should the auditors play in planning the physical inventory?
b.Describe the procedures performed by the auditors during their observation of a client's physical inventory.
c.Why do the auditors document their inventory test counts in their working papers?

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Definitions:

Mutual Association

A relationship between two or more entities where both or all parties benefit or influence each other.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together. A positive correlation indicates that as one variable increases, so does the other.

Correlational Hypothesis

A prediction about the existence of a relationship between two variables, without implying causation.

Experimental

Pertaining to a method of research that involves the manipulation of one or more variables to determine their effect on a certain outcome.