You are the audit manager in-charge of AAA Holdings Limited (AAA) for the year

ending 31 December 2021. AAA is a company which retails beds, mattresses and other

bedroom furniture items. Staff at the companys warehouse and shop will conduct the

year-end counting. The shop and warehouse are open seven days a week except for two

important public holidays during the year, one of which is 1 January. The company is

very busy with the week prior to the inventory counting but the shops will close at 15:00

on 31 December and staff will work until 17:00 to prepare the inventory for counting

on 1 January. The following are some selected inventory counting instructions that have

been provided to staff at AAA.

1. The inventory counting will take place on 1 January 2022 commencing at 09:00.

No movement of inventory will take place on that day.

2. The counting will be supervised by Mr. Lee, the inventory controller. All staff

will be provided with pre-printed, pre-numbered inventory counting sheets that

are produced by the computerized system. Mr. Lee will ensure that all sheets

are issued, sequence checked, and that all are collected at the end of the counting.

3. Counters will work on their own. They will be supervised by Mr. Lee. Staff will

count inventory with which they are most familiar in order to ensure that the

counting is completed as quickly and efficiently as possible.

4. All counters are required to identify and highlight any inventory that appears to

be old, damaged or slow-moving.

5. All inventory items counted will have a count tag attached to them that will

show that they have been counted.

6. All inventories that has been delivered to customers but that has not yet been

paid for in full will be added back to the inventory quantities by Mr. Lee.

Required:

Identify and explain five weaknesses in the above AAAs selected inventory counting

instructions.