Final answer:
When preparing for an inventory count observation, the management's count instructions are the key document to request as they guide the standardized process. Other useful documents include count sheets for a pre-selected sample, shipping documents for cut-off verification, and the inventory movement report for historical activity insight. These documents collectively ensure accuracy and manage risks in the inventory audit process. The correct answer is option O Warehouse copies of shipping documents before and after the count.
Step-by-step explanation:
When preparing for an inventory count observation, the most relevant document to request from the entity's warehouse manager would likely be the management's count instructions. This is because it outlines the procedures and guidelines for conducting the count, ensuring that the process is standardized and can be reliably observed and tested for accuracy. The instructions should detail the methodologies for counting, the persons responsible, and the treatment of any discrepancies found.
Requesting count sheets for a sample of items that you have pre-selected can be useful for auditors to verify the existence of inventory and to perform test counts. The warehouse copies of shipping documents before and after the count provide information on incoming and outgoing inventory, which is essential for confirming that the cut-off has been appropriately applied and that there are no items in transit which would erroneously affect the count. The inventory movement report showing all movements for the previous month is critical for understanding the historical activity and for planning the audit procedures.
Each of these documents plays an important role in the inventory audit process. However, the management's count instructions are most central to the initial observation phase, as they set the stage for how the physical inventory will be conducted. Collectively, these documents help ensure that the inventory count is accurate and that any risk of misstatement due to inventory movement is effectively managed.