Reference no: EM132637085

Problem - Case - Audit of perpetual inventory and audit procedures Alpha Plastics Limited conducts a limited inventory count each year-end. This includes limited count of purchased parts and supplies in its main warehouse but instead uses statistical sampling to estimate the year-end inventory. Alpha maintains a perpetual inventory record of parts and supplies and believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable to make a physical count of each item of inventory unnecessary.

Required -

A. Identify the audit procedures that should be used by the independent auditor are in addition to, normal required audit procedures when an entity utilizes statistical sampling to determine inventory value and does not conduct a 100% annual physical count of inventory items.

B. List at least 5 normal audit procedures that should be performed to verify physical quantities whenever an entity conducts a periodic physical count of all, or part, of its inventory.