When inventories are material and the auditor does not observe the inventory at or near the year-end, professional standards require the auditor to:
A) thoroughly test the accounting records.
B) observe some physical counts of the inventory.
C) disclaim an opinion on the financial statements.
D) resign from the engagement.
E) reperform the entire inventory count.

Question

Quizplus · Accepted Answer

The auditor is required to observe some physical counts of the inventory to verify its existence and condition.

When Inventories Are Material and the Auditor Does Not Observe