A risk to the auditor due to the complexity of physical inventory includes possible
A)overstatement of individual items across multiple locations for cutoff testing.
B)utility of the items exceeding their cost for existence testing.
C)movement of goods during existence testing.
D)stocking of only one type of inventory in the warehouse for presentation and disclosure testing.

Question

Quizplus · Accepted Answer

The complexity of physical inventory can lead to the movement of goods during existence testing, which increases the risk of misstatement. This risk can also affect the accuracy of the auditor's test counts, making it difficult to obtain reliable audit evidence. Overstating individual items across multiple locations for cutoff testing and stocking only one type of inventory in the warehouse for presentation and disclosure testing are not direct risks associated with the complexity of physical inventory. The utility of items exceeding their cost is also not a risk related to the complexity of physical inventory.

A Risk to the Auditor Due to the Complexity of Physical