Audit Program - Physical Count of Inventory Procedure Review the client's plan for counting the physical inventory. Attend the client count planning meetings. Observe the physical count. Determine whether the client's counting methods are effective and reliable. Observe the quality and condition of the inventory. Consider whether some of the inventory is obsolete. On a random basis select a sample of inventory items from the warehouse floor, count them, and trace the quantity to client count records. On a random basis select a sample of inventory items from the client count records, find them in the warehouse and count them. On a random basis select a sample of inventory items from the client count records and trace them to the perpetual inventory records. On a random basis select a sample of inventory items from the perpetual inventory records and trace them to the client's count records. Determine whether any inventory has been pledged as collateral. This is done to ensure that such information is disclosed properly in the financial statements. Assertion(s) Tested