(a) Auditors obtain several different confirmations from various sources during the course of their audit.

Required:

Describe the audit evidence provided by each of the confirmation listed below, the practical difficulties in obtaining them and the alternative audit evidence available when they are not provided:

1. Letter of representation                         (5 marks)

1. Direct confirmation of trade receivables            (5 marks)

1. Confirmation of inventory held by third parties             (5 marks)

(b) Explain why the audit of inventory is important to auditors (10 Marks)