Case Study

Crush Ltd. is a dealer in fast-moving consumer goods. The Company has warehouses throughout the country where the stocks are stored. The Auditor of the Company normally conducts physical verification of stocks along with the Management at the end of the financial year. However, the Auditor could not be physically present during stock-taking at two places on account of certain disturbances in the region. In the light of the above facts: (hint: Audit evidence)

(i) How sufficient appropriate audit evidence regarding the condition and existence of inventory may be obtained?

(ii) How an Auditor is supposed to deal when attendance at physical inventory counting is impracticable?