Ican 2025 Audit And Assurance Question 6

You led the audit team to attend the year-end physical inventory count at the client’s premises. Your observations on the process include the facts that: (i) all the staff involved in the physical count were drawn from the stores department; (ii) prenumbered count sheets issued to the staff during the count showed the inventory ledger balances for cross-checking against the physical counts; (iii) physical counts were recorded on the count sheets in pencil for easy amendments; (iv) inventories not previously recorded on the count sheets were recorded separately on different count sheets numbered only by the counting staff; (v) the physical inventories were counted without due regard to damaged and obsolete inventories; (vi) all inventories, including those belonging to third parties, were counted and recorded along with the entity’s inventories; (vii) at the end of the inventory count exercise, the sequence of the sheets were not checked nor the recapitulation done; and (viii) the count sheets were not duly signed by the responsible officers.