A very important aspect of the audit of the financial statements by an external auditor
is the observation of the physical stocktaking.
Required:
a) Why does the auditor need to attend a stock-take of the company that he audits?
(6 marks)
b) List four procedures that an auditor would need to undertake prior to attending a
company‟s stock-take. (4 marks)
c) Explain the audit tests that the auditor would apply to establish the physical
qualities of stock and their ownership.
(4 marks)
d) How does the auditor satisfy himself that the procedure adopted by the
management with regard to stocks have been applied throughout the financial
period? (6 marks)