Question

Which statement is correct relating to the count of inventory when a company that specializes in taking such counts ("the company") is involved with counting a client's inventory?

A. The auditor should consider the company a specialist, and follow the procedures outlined for addressing an auditor's specialist.
B. The auditor should not consider the counts by the company, by themselves, sufficient appropriate audit evidence.
C. The The auditor must observe all inventory counts taken by the company.
D. The auditor should observe a letter of representations form the company.

Answer 1

The correct statement is that the auditor should not consider the counts by the company alone sufficient appropriate audit evidence. Option B

Step-by-step explanation:

The correct statement relating to the count of inventory when a company that specializes in taking such counts is involved with counting a client's inventory is B. The auditor should not consider the counts by the company, by themselves, sufficient appropriate audit evidence.

When a company specializes in inventory counts, it is considered to be an auditor's specialist, and the auditor should follow the procedures outlined for addressing an auditor's specialist. However, the counts by the company alone are not considered sufficient appropriate audit evidence. The auditor should perform additional procedures to support the inventory counts.

Therefore, option B is the correct statement.