. Your client BB Ltd -- has inventory at approximately 50 locations in four States. The inventory is difficult to count and can be observed only by travelling by car. The internal controls over acquisitions, cash payments and computerised perpetual inventory records are considered effective. This is the fifth year that you have done the audit, and audit results in past years have been satisfactory. BBLtd is listed on the ASX. The company has achieved excellent results even though the industry as a whole has suffered a dramatic setback in the last two years.

a. Recommend an evidence mix for the five types of tests for the audit of inventory. Justify your answer. Include in your recommendations both tests of controls and substantive tests. (7 marks)

b. Is your long relationship with the client a strength or a weakness? Explain. (3 marks)