Question

the organization of a warehouse with a competent custodian in charge results in the orderly storage of inventory. this measure can protect inventory from theft and misuse. the auditor would assess these internal controls using:____.

Answer 1

The auditor would use observational techniques, inspect physical safeguards, and review inventory records to assess the internal controls over a warehouse's inventory organization. These measures ensure the orderly storage and protection of inventory.

Step-by-step explanation:

The organization of a warehouse with a competent custodian in charge results in the orderly storage of inventory. This measure helps protect inventory from theft and misuse. To assess these internal controls, the auditor would typically employ observational techniques, inspect physical safeguards, review inventory records, and possibly perform some form of inventory count or reconciliation. By observing the warehouse operations, the auditor can see if the competent custodian is effectively managing the inventory and if the procedures for safekeeping and handling of inventory are being followed. Inspecting physical safeguards includes assessing the security measures like locks, cameras, or access control systems that prevent unauthorized access. Lastly, reviewing inventory records and performing counts ensures that what is recorded matches the actual inventory on hand, which can detect any discrepancies that might indicate issues such as theft or misuse.