28) Higher than normal audit risk associated with the examination of a manufactu

Question

28) Higher than normal audit risk associated with the examination of a manufacturing inventory would be most likely to induce the auditor to:

A) encourage the client to conduct its annual physical inventory as close as possible to the year end closing date of annual reporting period.

B) encourage the client to conduct its annual physical inventory a month or more in advance of the end of its annual reporting period.

C) encourage the client to conduct its annual physical inventory at least one month following the annual reporting period undergoing audit.

D) encourage the client to engage the independent auditor to conduct the physical inventory for the client as a consulting engagement.

Explanation / Answer

If a client has higher than normal audit risk associated with the examination of a manufacturing inventory ,the auditor will ask the client to engage the independent auditor to conduct the physical inventory for the client as a consulting engagement.

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