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CS Professional · Internal and Forensic Audit · Internal Audit Tools and Techniques

During an internal audit of Kaveri Textiles Ltd, the auditor wants to confirm that the stores department actually holds the quantity of yarn shown in the stock register. Which evidence-gathering technique is most directly suited to this objective?

Physical inspection and count is the most suitable technique because it directly verifies that the yarn recorded in the stock register actually exists in the store. Inquiry, analytical ratios or payroll re-performance provide weaker or irrelevant evidence about the existence of stock.

  1. APhysical inspection and count of the stockCorrect
  2. BAnalytical review of the gross profit ratio
  3. CRe-performance of the payroll computation
  4. DInquiry of the stores manager alone

Explanation

Existence of stock is best verified by physically inspecting and counting it. Inquiry alone gives weak, unverified evidence. Analytical review and payroll re-performance do not address whether the stock physically exists.

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