You are auditing the inventory account and are concerned about the possibility of an inventory overstatement. What is the best audit procedure to detect damaged inventory?
A) observe the condition of inventory during the client's physical count
B) compare the condition of inventory from the previous year's count to the current year
C) compare inventory turnover from the previous year's inventory to the current year's inventory
D) reconcile the inventory counts to the cost accounting records

Question

Quizplus · Accepted Answer

Observing the condition of inventory during the client's physical count is the best audit procedure to detect damaged inventory. This will help the auditor spot any physical damage to the inventory or any other issues that might affect its valuation. Comparing the condition of inventory with the previous year or reconciling inventory counts to cost accounting records will not specifically help in detecting damaged inventory. Comparing inventory turnover will help in assessing the inventory's liquidity but will not help in detecting damaged inventory.

You Are Auditing the Inventory Account and Are Concerned About