David Anderson, CPA, is engaged in the audit of the financial statements of Redondo Manufacturing Corporation for the year ended June 30, 200X. Redondo's inventories at year-end include finished merchandise on consignment with consignees and finished merchandise stored in public warehouses. The merchandise in public warehouses is pledged as collateral for outstanding debt.

Required:

Normal inventory and notes payable auditing procedures have been satisfactorily completed. Describe the specific additional auditing procedures that Anderson should undertake with respect to:

a. Consignments out.

b. Finished merchandise in public warehouses pledged as collateral for outstanding debt.