ssume that 50% of a client's inventory is located in 2 warehouses subject to wall-to-wall counts at period-end and the remaining 50% of the inventory is located across 110 retail locations around the US subject to periodic cycle counts. The retail locations hold similar inventory for sale to customers; use the same inventory management system; and utilize the same cycle count program which is monitored centrally. There are no locations which have an increased risk of material misstatem
4. Assume that 50% of a client's inventory is located in 2 warehouses subject to wall-to-wall counts at period-end and the remaining 50% of the inventory is located across 110 retail locations around the US subject to periodic cycle counts. The retail locations hold similar inventory for sale to customers; use the same inventory management system; and utilize the same cycle count program which is monitored centrally. There are no locations which have an increased risk of material misstatement based on risk assessment procedures.
What is an appropriate testing approach based on the facts below?
A. Observe inventory at the 2 warehouses only
B. Observe inventory at the 2 warehouses as well as 10 of the retail locations
C. Observe inventory at 5 retail stores only
D. Observe inventory at 2 of the warehouses and combine the sales facilities into 1 Count Location, spreading test counts across all locations
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