As Part of an Operational Audit, an Auditor Compared Records

Multiple Choice

As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

A) Determine the effects of a stock-out on the organization's profitability.
B) Determine whether a clear policy exists for setting inventory limits.
C) Determine who approved the purchase orders for the spare parts.
D) Determine whether purchases were properly recorded.