When Outside Firms of Non-Accountants Specialising in the Taking of Physical

Multiple Choice

When outside firms of non-accountants specialising in the taking of physical inventories 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:

A) make or observe some physical counts of the inventory, re-compute certain inventory calculations and test certain inventory transactions.
B) consider the report of the outside inventory-taking firm to be an acceptable alternative procedure to the observation of physical inventories.
C) consider the reduced audit effort with respect to the physical count of inventory as a scope limitation.
D) not reduce the extent of work on the physical count of inventory.