Cindy Li is the partner in charge of the audit of Blue Distributing Corporation, a wholesaler that owns one warehouse containing 80% of its inventory. Cindy is reviewing the working papers that were prepared to support the firm’s opinion on Blue’s financial statements. Cindy wants to be certain that essential audit procedures are well documented in the working papers.

Required:
a. What evidence should Cindy expect to find that the audit observation of the auditee’s physical count of inventory was well planned and that assistants were properly supervised?
b. What substantive audit procedures should Cindy find in the working papers that document management’s assertions about existence and completeness of inventory quantities at the end of the year? (Refer to Exhibit 12–8 for procedures.)