What issues must the auditor consider if the client has inventory located away from the client's place of business?
What will be an ideal response?
The auditor must determine where the inventory is and what the value of this inventory is. The auditor
must also determine if the inventory is in the hands of consignees or in public warehouse facilities. If the
amounts are material, the auditor must assess if the controls over the inventory is strong. If the amounts
are material, and the control over this type of inventory is not particularly strong, the auditor considers
counting the inventory himself. If the controls are fairly strong, the auditor can confirm with the custodian
of this inventory the amounts involved and this would be considered sufficient appropriate audit evidence
about the existence of this inventory.
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Indicate whether the statement is true or false.