PUUUULU You are engaged on the audit of Plastics Pots Ltd., a company manufacturing a range of plastic goods for sale mainly to department stores. In prior years, the company has carried out a physical inventory counting at the year-end date only, but the chief accountant has told you that he wishes to introduce a system of continuous inventory counting throughout the year and to eliminate the year-end inventory counting entirely. In future, he wishes to determine inventory quantities by reference to the inventory records. You are informed that the principal raw material is a single grade of plastic delivered in loose, granular form; this material is kept in very large bins. All waste materials are re-usable. A complete range of finished goods is kept in stock. Discussion a. State briefly what benefits are gained by management from a year-end inventory counting. Why does the auditor observe such inventory counting? b. List the factors you would take into account when advising the chief accountant Plastic Pots Ltd. on his proposal that continuous inventory counting replace the end inventory counting. C. Assuming that continuous inventory counting is introduced by Plastic Pots Ltd., stave with reasons: i. The audit actions you would take to satisfy yourself that inventory quantities been properly determined. ii. What steps you would take if material differences exist between inventory and the quantities determined by continuous inventory counting entory records