Ballpark Distributors, Inc. is a large public company with a calendar year-end that distributes sports memorabilia to various retailers. Ballpark conducted an inventory count on November 30 of the year being audited. Instead of conducting another inventory count at year-end, the company decided to estimate the year-end inventory using a sample of year end inventory on hand. The company uses a perpetual inventory system and feels that sampling to estimate the year-end inventory will produce a reliable financial statement amount.
Assume that the auditor observed and tested Ballpark’s physical inventory count on November 30, and was satisfied that the count and resulting adjustments produced an appropriate inventory account balance on November 30.
a. Explain any appropriate roll-forward procedures between the inventory count date and year-end that auditor should perform.
b. What additional test of details of balances should the auditor perform?