You are the audit senior of JJH and Associates and are responsible for the audit of the inventory for Glass Star, a new client. You will be attending the year-end inventory count. Sally, your manager, has sent to you a description of the inventory count arrangements obtained from the client. She has asked you to read it carefully and to write a memo to her to identify and explain any weaknesses in the client inventory count arrangement. She also instructed you to provide recommendations for the deficiencies you might discover. Finally, your memo should include a description of two audit tests to be performed during the inventory count in order to gain sufficient appropriate audit evidence. Glass Star (GS) is a glass manufacturer that operates from a large production facility, where it undertakes continuous production 24 hours a day, seven days a week. Also on this site are two warehouses where the companys raw material and finished goods are stored. GSs year-end is December 31. GS is finalizing the arrangements for the year-end inventory count, which is to be undertaken on December 29. The finished windows are stored within 20 aisles of the first warehouse. The second warehouse is for large piles of raw materials, such as sand, used in the manufacture of glass. The following arrangements have been made for the inventory count: - The warehouse manager will supervise the count, as he is most familiar with the inventory. There will be 10 teams of counters and each team will contain two members of staff, one from the finance and one from the manufacturing department. None of the warehouse staff, other than the manager, will be involved in the count. - Each team will count an aisle of finished good by counting up, and then down, each aisle. As this process is systematic, it is not felt that the team will need to flag areas once counted. Once a team is finished counting an aisle, they will hand in their sheets and be given a set for another aisle of the warehouse. In addition to the above, to assist with the inventory counting, there will be two teams from the internal audit department, and they will perform inventory counts. - The count sheets are sequentially numbered, and the product codes and descriptions are printed on them but no quantities. If the counters identify an inventory that is not on their sheets, they are to enter the item on a separate sheet, which is not numbered. Once all counting is complete, the sequence of the sheets is checked, and any additional sheets are also handed in at this stage. All sheets are completed in ink. - Any damaged goods identified by the counters will be too heavy to move, hence they are to be left where they are, but the counter is to make a note detailing the level of damage. - As GS undertakes continuous production, there will be movements of raw materials and finished goods in and out of the warehouse during the count. These will be kept to a minimum. - The level of work in process in the manufacturing plant is to be assessed by the warehouse manager. It is likely that this will be an immaterial balance. In addition, the raw materials quantities are to be approximated by measuring the height and width of the raw material piles. In the past, this task has been undertaken by a specialist; however, the warehouse manager feels confident that he can now perform this task on his own.