This question/answer is one of the reasons I hate AUD.
An insignificant portion of a client's inventory is in public warehouses. Evidence of the existence of this merchandise can most efficiently be acquired through which of the following methods?
a. Confirmation.
b. Calculation.
c. Observation.
d. Inspection.
Explanation
Choice “a” is correct. The auditor should observe the physical inventory count of goods held in public warehouses if the inventory held therein is significant; otherwise, confirmation of such inventory is sufficient.
Choice “c” is incorrect. Although observation would provide the more effective evidence of existence, it would generally not be the most efficient and should only be done if the inventory is significant.
Ugh, I'm complaining because I choose Observation. Grrr… the topics are so easy, but the questions are so tricky!! I always understand the answer after Becker explains it, but when I'm reading the questions, it's never so clear. Out of all the sections I've taken so far, the need to RFTQ is definitely the most important here.
FAR 7/3/13 - 82
BEC 8/21/13 - 82
AUD 10/2/13 - 92
REG 12/3/13 - 88
DONE!!!! CA Candidate
Beat the 12/31/13 clock!
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