options are

audit procedure 1

• Observation of inventory at selected locations without prenotification of the locations selected.
• Review of inventory turnover of selected inventory items.
• Review of trends in sales returns.
• Tests of the accumulation of manufacturing costs and assignment of costs to selected inventory items.

audit procedure 2

• Analytical procedures comparing ratios (e.g., gross margins) at locations observed to locations not observed.
• Analytical procedures involving the comparison of recorded costs of inventory items to costs assigned in prior periods.
• Inquiry of sales personnel about sales of particular inventory items.
• Inquiry of production and quality control personnel.

c. Management of a computer reseller overstates inventory value by failing to recognize the loss in value of certain inventory items that are obsole. Audit Procedure 1. Audit Procedure 2. Required: Eor each misstatement, identify the substantive auditing procedures that may be used by auditors to detect the misstatement