Consider the audit procedure referred to as the “physical inventory count.”
a. How does the client perform this procedure? What are the auditor’s responsibilities for it?
b. When is it done?
c. What is the purpose of the physical inventory count?
d. Describe the assertions associated with the inventory count. Explain why they are important to the inventory process.
e. Identify the accounts that can be misstated if a physical inventory count is not done.
f. If these accounts are misstated, how will this affect outsiders? Explain your answer.