Audit of Inventories and Cost of Sales 1. Explain the importance of each assertion in the audit of inventories. 2. What are the key factors that can lead to an under/overstatement of the inventory balance? 3. How is the directional risk of inventories applied in determining the appropriate audit procedures to be performed? 4. What are the different risks associated in the accounting of inventories? 5. How does inventory control deficiencies affect the development of audit procedures for inventories? 6. How do you assess the risk of material misstatement associated with the audit of inventories? 7. Are auditors allowed to issue an audit report without observing the physical inventory count? 8. What do you think are the issues involved if the auditor misses observing physical count because of health protocol restrictions given that we have covid19 pandemic