3 Your firm is the auditor of DJU Limited. It sells competitively priced clothing and small household goods through approximately 500 high street retail stores throughout the country and over the internet. The stores are supplied from a large distribution warehouse in the West Midlands and the internet orders are fulfilled from the same warehouse. The stores have, on average, about 50,000 of inventory. The warehouse typically has about 25,000,000 of inventory on hand. The company adopts perpetual inventory systems at all locations. It has a team of 10 people who travel the country in teams of two to conduct inventory counts at all stores so that all stores are visited at least twice a year. A full warehouse stock count is conducted at the year end. You are the manager in charge of the audit of the statutory financial statements of DJU Limited. Required (a) What action would you expect to happen following a visit by one of the two person teams to a store to check the inventory at that store? (6 marks) (b) As audit manager what considerations will you apply in deciding on the mix, as between the stores and the central warehouse, of your audit visits to observe the stock counting procedures adopted by the company? (6 marks) (c) Who would you expect the store stock counting teams to report to? (2 marks) (d) What processes and procedures would you expect the company to undertake as part of the full warehouse stock count? (11 marks) Total 25 marks