AUD: Specific matters that require special consideration

The rules, one page each

1. Must an Auditor Attend the Physical Inventory Count?Sort it

   For material inventory held by the entity, attend the physical inventory count unless attendance is impracticable. If attendance is impracticable, perform alternative procedures to obtain sufficient appropriate evidence about existence and condition.

2. Inventory held by others: public warehouse confirmations and follow-upContrasting cases

   For material inventory held by an independent custodian, obtain direct confirmation of quantities (and, if practicable, condition); if confirmations are not obtained or are unreliable, perform alternative procedures such as inspecting records, visiting the warehouse, or arranging an independent count.

3. Legal letters and refusals: getting evidence on litigation and reporting the resultContrasting cases

   For potentially material litigation handled by external counsel, request management to send a letter of inquiry and authorize counsel to respond directly. A refusal by management is a client-imposed scope limitation; a refusal by counsel despite authorization is a scope limitation caused by circumstances. If sufficient appropriate evidence cannot be obtained, modify the opinion based on materiality and pervasiveness.