[Anonymous]

To gain assurance that all inventory items in a client’s inventory listing schedule are valid, an auditor most likely would trace:

a.

Inventory tags noted during the auditor’s observation to items listed in the inventory-listing schedule.

b.

Inventory tags noted during the auditor’s observation to items listed in receiving reports and vendors’ invoices.

c.

Items listed in the inventory-listing schedule to inventory tags and the auditor’s recorded count sheets.

d.

Items listed in receiving reports and vendors’ invoices to the inventory-listing schedule.

ANSWER: Choice “c” is correct. Tracing from the inventory schedule to the inventory tags and the auditor’s recorded count sheets verifies the validity (existence) of the items. Note that the correct term for the directional test for existence is “vouch.” However, in practice (and on the CPA Exam), the term trace is sometime used interchangeably with the term vouch.

OMG is this true? will they really screw me over on the exam by using trace/vouch interchangeably. THis is MADDENING. first becker tells me to know the audit terminology very well: trace/vouch/review/inquire/foot/examine/inspect etc etc THEN they say haha jk no vouch and trace are used interchangeably…this is so messed up i am so pissed. I though ok when im doing question i see trace oh ok bingo eliminate all downward testing and anything to do with existence assertion…NOW theyre saying haha no you suck we were just kidding we meant vouch not trace oops sorry to use a friggin ANTONYM in the question interchangeably. /end rant.