When determining the sample size for the number of items the auditor should count during the physical inventory,
A) it is easy to quantify the number of items based on a formula developed by the AICPA.
B) one of the key determinants that must be considered is internal control over the physical count.
C) one of the key determinants that must be considered is the cost involved.
D) generally accepted auditing standards require that at least 80% of the dollar value of the inventory should be included in the sample.

Question

Quizplus · Accepted Answer

The strength of internal controls over the physical count is a key determinant in deciding the sample size for inventory counting, as stronger controls may allow for a smaller sample size.

When Determining the Sample Size for the Number of Items