Your audit client, Cars Ltd, is a retailer of motor vehicle accessories. It carries approximately 280 stock lines, with individual items ranging in value from $10 to $10 000.

Approximately 25 per cent of year-end stock is expected to be held at the companys central

warehouse in Melbourne, with the remainder spread relatively evenly across 10 retail outlets. A full

stocktake will be carried out at all locations at year end.

The inventory system produces a complete stock listing at year end showing:

• stock code
• quantity held by location
• total quantity held
• cost per unit
• total cost per stock item.

In addition, the system produces a stock sheet report for each location, which lists a description and the stock code of each item held at that location, matching the perpetual records. Quantities are not included, as these are completed by the count team.

REQUIRED

1. In order to gather evidence about the existence and completeness assertions, the auditor will perform test counts at the stocktake. Generally, from which populations should samples be selected to satisfy each of these two assertions?
2. Explain how you would select samples to test the existence and completeness assertions at each location