Just Start Tools runs a network of small hardware retail outlets across the state. All sales are made for cash or on credit card and processed through electronic tills. A wide range of goods are stocked by the stores, meaning that the business deals with a large number of suppliers. All goods are purchased on credit with varying terms, depending on the supplier. Invoices are paid by cheque after a package of documents is collated and approved for payment. Ordering of goods and subsequent payments are processed by the central office with delivery direct from supplier to the stores — no central warehouse is used. Just Start Tools uses a perpetual stock system and conducts test counts at regular periods throughout the year.

Required

(a) What controls should exist for inventory movements at the local store level and the central office?

(b) Explain how the stocktake for Just Start Tools should be audited. What details are most important?