The following tasks are completed by the auditor while observing the physical inventory. For each task, state which assertion(s) is tested by the task: (1) existence or occurrence, (2) completeness, (3) rights and obligations, (4) valuation or allocation, or (5) presentation and disclosure.
a. The auditor makes test counts of selected items and records the test counts for subsequent tracing into the client's inventory compilation.
b. The auditor takes notations of all items that appear to be obsolete or that are in questionable condition; the auditor follows up on these items with inquiries of client personnel and retains the data to determine how they are accounted for in the inventory compilation.
c. The auditor observes the handling of scrap and other material.
d. The auditor observes whether any physical movement of goods occurs during the counting of inventory.
e. The auditor records all high-dollar-value items for subsequent tracing into the client's records.