Brompton Hardware runs a network of small hardware retail outlets across the province. All sales are made for cash or on credit card and processed through electronic tills. A wide range of goods is stocked by the stores, meaning that the business deals with a large number of suppliers. All goods are purchased on credit with varying terms, depending on the supplier. Invoices are paid by cheque after a package of documents is collated and approved for payment. Ordering of goods and subsequent payments are processed by the central office, with delivery direct from supplier to the stores-no central warehouse is used. Brompton uses a perpetual inventory system and conducts test counts at regular periods throughout the year.
Required
(a) What controls would you expect to see over inventory movements at the local store level and at the central office?
(b) Explain how you would audit the inventory count for Brompton Hardware. What details would you focus on most?