Question: Statistical Sampling Used to Estimate Inventory. ACE Corporation does not conduct a complete annual physical count of purchased parts and supplies in its principal warehouse but uses statistical sampling to estimate the year-end inventory. ACE maintains a perpetual inventory record of parts and supplies. Management believes that statistical sampling is highly effective in determining inventory values and is sufficiently reliable, making a physical count of each item of inventory unnecessary.
Required: a. List at least 10 normal audit procedures that should be performed to verify physical quantities whenever a client conducts a periodic physical count of all or part of its inventory (see Appendix Exhibit for procedures).
b. Identify the audit procedures you should use that change or are in addition to normal required audit procedures (in addition to those listed in your solution to part a) when a client utilizes statistical sampling to determine inventory value and does not conduct a 100 percent annual physical count of inventory items.
