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Topic: Auditing Inventory
1. The audit of inventory can be difficult for a number of reasons: inventory is easily moved and can be stored at multiple locations, plus it can be difficult to value. What steps can an external auditor take to increase confidence in the results of the inventory audit?
2. There have been several instances in the past of fraud based on inventory. What are some of the ways in which a fraud involving inventory can be perpetrated? How can the auditor discover those frauds?
3. An auditor focusing on inventory isn’t interested in purchasing or accounts payable, because that’s just matching purchase order numbers to invoices and checks. Do you agree? Why or why not?
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