Final answer:
The least likely auditor's objective when auditing inventories and cost of goods sold is ensuring that only inventory on hand at the end of the year is included in inventory totals. Auditors focus on valuation methods, confirming existence, and ensuring completeness of inventories.
Step-by-step explanation:
The student's question relates to the objectives of auditors during the audit of inventories and cost of goods sold. Among the options provided, the least likely objective for an auditor is c. Establish that the client includes only inventory on hand at year-end in inventory totals. This is because auditors are primarily concerned with whether the inventory exists and is owned by the client at the balance sheet date, rather than ensuring that only the inventory physically on hand is counted. The incorrect option seems to imply that the auditor is responsible for inventory management, which is not part of the audit process.
The auditor's objectives typically include ensuring that:
- Valuation of inventories and cost of goods sold is arrived at by appropriate methods.
- Existence of inventories and the occurrence of transactions affecting cost of goods sold.
- Completeness of inventories, making sure all inventory that should be recorded is included in the financial statements.
In verifying inventory valuation, auditors check if the inventory is valued correctly according to accounting principles (e.g., lower of cost or market). In assessing the existence and completeness of inventory, auditors perform procedures like physical inventory counts and reviewing transaction records. Hence, ensuring that valuation is appropriate, existence is confirmed, and completeness is established form the core objectives during the audit of inventories and cost of goods sold.