Quicksilver Inc. is a privately-owned company that operates a children's toy store. Quicksilver has hired Tabitha, a CPA and sole practitioner, to conduct the audit of the April 30, 2022 financial statement. She does not have much auditing experience but is confident that if she follows generally accepted auditing standards (GAAS), there will be no problems. Tabitha started the audit on April 30, 2022 by attending the inventory count, as inventory is the largest current asset on Quicksilver's balance sheet.

Quicksilver had three teams of employees counting inventory, and the count was completed in two hours. Tabitha walked through the inventory storage area, listening to the count teams as they did their work, and asking the staff if they had any problems. Tabitha told the employees that during the count, they were to report any problems to her, and to turn in their completed count sheets only to her. Tabitha was not concerned about count sheets that were not used (empty sheet) by the employees as she knows that the most important concern about inventory is to ensure it is not overstated. Tabitha then took a random sample of the inventory count sheets that the employees had used, and checked the counts herself. She found 12 errors where the counter had transposed numbers, and Tabitha corrected them all. She then adjusted the inventory account in the trial balance to agree with the count results and made the appropriate notes in her working papers for the adjusting entry.

After the count was finished, the last thing Tabitha did was to review the inventory counting instructions prepared by inventory manager, to make sure they were effective

REQUIRED

Identify 3 important mistakes that Tabitha has made in her audit of the inventory account (1 mark each). For each mistake identified, explain why this is a mistake (1 mark each)