Exam 21: Assurance,Attestation,and Internal Auditing Services

Which of the following is least likely to be a possible cause of book-to-physical differences in inventory quantities?

Observing a client's inventory held on consignment by others tests the assertion of

If the perpetual inventory records show lower quantities of inventory than the physical count,an explanation of the difference might be unrecorded

A client maintains perpetual inventory records in both quantities and dollars.If the assessed level of control risk is high,an auditor would probably

For several years,a client's physical inventory count has been lower than what was shown on the books at the time of the count so that downward adjustments to the inventory account were required.Contributing to the inventory problem could be weaknesses in internal controls that led to the failure to record some

When perpetual inventory records are maintained in quantities and in dollars and internal control over inventory is weak,the auditor would probably

The "cradle-to-grave" cycle for inventory begins when goods are purchased and stored and ends when the finished goods are shipped to customers.

Which of the following control activities would most likely be used to maintain accurate perpetual inventory records?

The accuracy of perpetual inventory records may be established,in part,by comparing perpetual inventory records with

The audit test of control "Review and test procedures for issuing materials to manufacturing departments" provides assurance mainly for the occurrence assertion for inventory management.

Which of the following is a plausible explanation for a large increase in the number of days outstanding in inventory?

While observing a client's annual physical inventory,an auditor recorded test counts for several items and noticed that certain test counts were higher than the recorded quantities in the client's perpetual records.This situation could be the result of the client's failure to record

An auditor will usually trace the details of the test counts made during the observation of the physical inventory count to a final inventory schedule.This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of the physical inventory count are

Explain the importance of observing physical inventory during an audit.

When outside firms of non-accountants specializing in physical inventory counts are used to count,list,price,and subsequently compute the total dollar amount of inventory on hand at the date of the physical count,the auditor will ordinarily

Auditors are most likely to ensure that no production activity is scheduled prior to

The element of the audit planning process most likely to be agreed upon with the client before implementation of the audit strategy is the determination of the

Production personnel should ordinarily be responsible for maintaining perpetual inventory records.

An auditor most likely would make inquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's financial statement assertion of

Once the controls in the inventory system have been tested,the auditor sets the level of control risk.