Inventory Count Observation Planning and Substantive Procedures Sammy Smith is
Inventory Count Observation: Planning and Substantive Procedures. Sammy Smith is the partner in charge of the audit of Blue Distributing Corporation, a wholesaler that owns one warehouse containing 80 percent of its inventory. Smith is reviewing the audit documentation that was prepared to support the firm’s opinion on Blue’s financial statements and wants to be certain that essential audit procedures are well documented.

a. What evidence should Smith expect to find indicating that the observation of the client’s physical count of inventory was well planned and that assistants were properly supervised?
b. What substantive procedures should Smith find in the audit documentation of management’s balance assertions about existence and completeness of inventory quantities at the end of the year?

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