A. The auditor's study of the flow of materials will disclose the points at which various documents such as material requisitions arise. They will also meet some of the key manufacturing personnel who may give the auditor an insight into production problems and other matters such as excess or obsolete materials, and scrap and spoilage. The auditor will be alert for the attitude of the manufacturing personnel toward internal controls. B. An important aspect of the audit will be an effective analysis of the inventory cost system. Therefore, the auditor will observe the nature of the company's products, the manufacturing facilities and processes, and the flow of materials so that the information obtained can later be related to the functions of the cost system. C. The measures taken by the client to safeguard assets, such as protection of inventory from fire or theft, will also be an indication of the client's attention to internal control measures. D. During the audit of a company engaged in the beverage-bottling plant would require attention to the correct charging of material and labor to specific jobs, whereas the allocation of material and labor charges in the audit of a custom-manufacture of costly products such as yachts would not be verified on the same basis. E. The nature of the company's products and the manufacturing facilities and processes will reveal the features of the cost system that will require close audit attention. The CPA will note the stages at which finished products emerge and where additional materials must be added. The auditor will also be alert for points at which scrap is generated or spoilage occurs. F. The CPA may make some inquiries about the methods of production scheduling, timekeeping procedures and whether work standards are employed. As a result of these observations, the internal documents that relate to the flow of materials will be more meaningful as accounting evidence. G. The auditor's observation of the manufacturing processes will reveal whether there is idle plant or machinery that may require disclosure in the financial statements. Should the machinery appear to be old or poorly maintained, the CPA might expect to find heavy expenditures in the accounts for repairs and maintenance. On the other hand, if the auditor determines that the company has recently installed new equipment or constructed a new building, they will expect to find these new assets on the books. H. The auditor's tour of the client's plant facilities is important because if there is any fraud or personnel theft, it will discover it then and the auditor can prepare preliminary tests that can reveal unusual changes in inventory. I. Inherent risk of financial statement misstatements will always be decreased if the auditor is able to tour of the client's plant. Especially if the client has set unreasonable objectives or if the performance measurement system encourages aggressive accounting