If inventories are material to the financial statements, the standards require the auditor to attend the count. The auditor evaluates the count instructions, observes the count teams, performs test counts and notes obsolete or damaged stock.
If the auditor has not been appointed before the count date, this procedure may not be possible and a qualified opinion may result.
Source: BDS 501
Related terms
Inventories (TAS 2)Assets held for sale in the ordinary course of business, in the process of production, or as raw materials and supplies to be used in production.Audit evidenceAny information and documents the auditor uses to reach the conclusions on which the opinion is based.Interim auditAudit work carried out before year end, usually in the last quarter of the period, covering risk assessment, tests of controls and some tests of details.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 22, 2026 · This definition is for general information only.