Stenton Toys Pty Ltd is a toy retailer with shops in each of the Australian state capitals. Stenton has a head office and a central warehouse in Brisbane. All stock purchases are made centrally and are held in the Brisbane warehouse; they are then despatched around the country as needed by each of the shops. Details of stock movements are recorded on a perpetual inventory system and Stenton carries out year-end stocktakes at all locations.

You are the auditor of Stenton and are planning the audit of the stocktake that is about to take place; you have established the following from your planning procedures.

1. An inventory report will be produced from the inventory system for each shop and the warehouse. The report gives details of inventory code, stock description, units held and unit selling price. The report also gives a breakdown of where inventory items are held and the total value of items held at each location.

2. A sales movement report is also produced which gives details of: inventory code, unit descriptions, units purchased for the period and their cost price, units sold in the period.

3. The largest shop is in Melbourne and 35% of all stock is held there.

4. The Perth shop has suffered significant levels of stock shrinkage recently.

5. To facilitate the stocktake an additional report is produced which includes only the inventory code and description. Stock counters use this report to indicate the units of stock held at the time of the count.

Required

Describe how you would select samples to test the existence and completeness of inventory units.

Indicate how the sample sizes used in the Melbourne and Perth shops would differ.