The new storage facilities of Menty Ltd are a bit disorganised at the moment and warehouse staff seem to wasting a lot of time transferring stock between premises. At times they have been unable to locate stock (although they did eventually find it in their own delivery vans which had been used as a stock overflow area). The product lines are mainly sweeties stored in either plastics tubs or cardboard boxes. Some sweeties are loosely stored and are scooped into boxes dependent upon the weight of confectionery ordered. All stock is stored in expiry date order to allow for efficient stock rotation. The stock-take will take place at the year end and the auditors will be in attendance. Required:

a) Explain three difficulties that an auditor can encounter when determining each of the following: i. Quantity of Menty Ltd.s inventory and (7 Marks) ii. Valuation of Menty Ltd.s inventory. (7 Marks)

b) What work should be carried out by the auditor in relation to inventories before he attends the stocktake? (8 Marks)

c) State the four audit assertions that should be met when auditing Menty Ltd.s inventory and give one example of an audit test to meet each of the objectives given. (8 Marks) (Total 30 Marks)