Ace Corporation does not conciuct a complete annual physical count of purchased parts and supplies in its principal warehouse but uses statistical sampling instead to estimate the year-end inventory. Ace maintains a perpetual inventory record of parts and supplies and believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable to make a physical count of each item of inventory unnecessary.

Required:

a. Identify the audit procedures that should be used by the independent auditor that change or are in addition to normal required audit procedures when a client utilizes statistical sampling to determine inventory value and does not conduct a 100 percent annual physical count of inventory items.

b. List the normal audit procedures that should be performed to verify physical quantities whenever a client conducts a periodic physical count of all or part of its inventory.