described may indicate the he of test counts. The substantive auditing procedures reports to be printed out for Kachelmeier's follow-up by subsequent application of manual procedures. Group the procedures by nt using (a) the perpetual inventory file and (b) the physical inventory and test count files. Do not describe subsequent manual auditing procedures. (AICPA, adapted) 13-31 An auditor is examining the financial statements of a wholesale cosmetics distibu- 1, 13-12 tor with an inventory consisting of thousands of individual items. The distributor keeps its inventory in its own distribution center and in two public warehouses. An electronic inventory file is maintained and at the end of each business day the file is updated. Each record of the inventory file contains the following data: Item number. Location of item. Description of item. Quantity on hand. Cost per item. Date of last purchase. Date of last sale. Dia Quantity sold during year. The auditor plans to observe the distributor's physical count of inventory as of a given date. The auditor will have available the inventory file on the date of the physi- cal count and a generalized audit software package. Required: The auditor is planning to perform basic inventory-auditing procedures. Identify the basic inventory-auditing procedures and describe how the use of the generalized audit software package and the inventory file data might help the auditor perform such auditing procedures. Organize your answer as follows: How a Generalized Audit Software Package and the Inventory File Data Might Be Helpful Basic Inventory-Auditing Procedure 1. Observation of the physical count, making and recording test counts where applicable. 1. By determining which items are to be test counted by selecting a random sample of a representative number of items from the inventory file as of the date of the physical count. (AICPA, adapted) 13-32 In obtaining evidential matter in support of financial statement assertions, the audi- tor develops specific audit procedures to address those assertions. 3-12 Required: Hillmart is a retail department store that purchases all goods directly from wholesal- ers or manufacturers. Select the most appropriate audit procedure from the list belou and enter the number in the appropriate place on the grid. (An audit procedure may be selected once, more than once, or not at all.)