Assume you are an internal auditor and you are assigned an assurance engagement relating to your firm's inventory process.

1. What are some key controls and potential risks that you would investigate / test?
2. Give an example of both a "material" observation and also a "significant" observation you might find in your audit task
3. With regard to your examples in part 2, explain the criteria you used to determine what constitutes a material observation versus a significant one