Question

An auditor selected items for test counts while observing a client's physical inventory. The auditor then traced the test counts to the client's inventory listing. This procedure most likely obtained evidence concerning the relevant assertion about

Answer 1

An auditor's procedure of observing a client's physical inventory and tracing test counts to the inventory listing provides evidence on the inventory's existence and completeness to ensure all assets are present and accurately recorded.

Step-by-step explanation:

The procedure of an auditor selecting items for test counts during a client's physical inventory observation and then tracing these counts to the client's inventory listing is primarily aimed at obtaining evidence regarding management's assertion about inventory existence and completeness. This procedure verifies that the inventory recorded on the listing actually exists and that the quantities recorded are accurate. The assertion of existence confirms that recorded assets are present at a given date, and the assertion of completeness ensures that all assets that should be recorded are included in the inventory listing.