You work for the local CPA firm Lansdown and Interurban and are assigned to the audit of the Strathcona Mercantile Company (Strathcona), a successful retailer on Government Street in Victoria. You reviewed Strathconas internal controls over inventory and documented them. After reviewing the controls, your audit manager stated that she would like to take a combined testing approach to the inventory section. She believes that the following controls used by Strathcona are most important:

1. Written inventory policies on safeguarding inventory, based on the inventory storeroom configuration and processed to check inventory in and out. Staff are required to review these policies when they begin working for Strathcona and after any extended leave.

2. The sequential numbering of inventory receiving reports is maintained.

3. Physical counts of inventory are undertaken on a monthly basis and compared to the amount recorded in the inventory sub-ledger account. Required: Identity the benefit of the control, the assertion that it impacts and design a test of control for each