Stenton Toys Ltd. is a toy retailer with stores in each of the Canadian provinces. Stenton has a head office and a central warehouse in Mississauga, Ontario. All inventory purchases are made centrally and are held in the Mississauga warehouse; they are then dispatched around the country as needed by each of the stores. Details of inventory movements are recorded on a perpetual inventory system and Stenton carries out year-end inventory counts at all locations. You are the auditor of Stenton and are planning the audit of the inventory count that is about to take place. You have established the following from your planning procedures: 1. An inventory report will be produced from the inventory system for each store and the warehouse. The report gives details of inventory code, item description, units held, and unit selling price. The report also gives a breakdown of where inventory items are held and the total value of items held at each location. 2. A sales movement report is also produced that gives details of inventory code, unit descriptions, units purchased for the period and their cost price, and units sold in the period. 3. The largest shop is in Toronto and 35% of all inventory is held there. 4. The Winnipeg shop has suffered significant levels of inventory shrinkage recently. 5. To facilitate the inventory count, an additional report is produced that includes only the inventory code and description. Inventory counters use this report to indicate the units of inventory held at the time of the count.

Which of the following accurately describes the auditors procedures and focus with respect to the inventory count?

Select a sample of inventory off the count sheet and re-count the inventory to confirm completeness.

Select a sample of inventory off the count sheet and re-count the inventory to confirm existence.

More attention will be focussed on the completeness assertion. Larger sample will be selected in the Toronto shop.

Lower inherent and control risk with respect to inventory in Winnipeg.

Select a sample of physical inventory items, count the items and agree to the count sheets to confirm completeness.