What Is the First Step That the Auditor Takes When

Multiple Choice

What is the first step that the auditor takes when auditing the valuation of inventory?

A) Conduct analytical review,comparing gross margin for the current year to the prior year.
B) Do an industry analysis to determine whether there is a potential for technology-induced obsolescence.
C) Ask the client about the level of obsolete inventory that was on hand and counted during the inventory count.
D) Clearly establish the valuation method used and how the calculations are being performed.