During the inventory count, which procedure is used to verify existence and completeness?

During the inventory count, which procedure is used to verify existence and completeness?

• A. Perform test counts by going from count sheets to inventory to confirm existence, and from inventory to count sheets to confirm completeness
• B. Note WIP, 3rd party inventory, damaged or obsolete inventory
• C. Note last GRN and GDN to test cut-off
• D. Take copies of inventory count sheets

Answer: (A)

Verifying existence and completeness during an inventory count is best done by cross-checking the counts in two directions. First, trace from the count sheets to the actual inventory to confirm that every item listed on the sheets exists in stock. Then, trace from the physical inventory back to the count sheets to confirm that every item actually counted is recorded. This bidirectional checking directly ensures existence (the items counted are real) and completeness (all counted items are captured in the records). Other options address different concerns. Noting items like WIP, third-party inventory, or damaged/obsolete stock focuses on conditions or valuation, not on the verification of existence and completeness during the count. Testing cut-off using last goods receipt notes relates to whether items are recorded in the correct period. Taking copies of count sheets is about documentation, not the verification process itself.

Verifying existence and completeness during an inventory count is best done by cross-checking the counts in two directions. First, trace from the count sheets to the actual inventory to confirm that every item listed on the sheets exists in stock. Then, trace from the physical inventory back to the count sheets to confirm that every item actually counted is recorded. This bidirectional checking directly ensures existence (the items counted are real) and completeness (all counted items are captured in the records).

Other options address different concerns. Noting items like WIP, third-party inventory, or damaged/obsolete stock focuses on conditions or valuation, not on the verification of existence and completeness during the count. Testing cut-off using last goods receipt notes relates to whether items are recorded in the correct period. Taking copies of count sheets is about documentation, not the verification process itself.