A very important aspect of the audit of the financial statements by an external auditor is the observation of the physical stocktaking.Required: Why does the auditor need to attend a stock-take of the company that he audits?

  • The overall purpose of the auditors‘ attendance is to assess the effectiveness of
    The clients stock taking procedures. Verify that the stock take exercise is carried out per the stock instructions. This will assure the auditor that the exercise can be relied upon to provide complete and accurate figures of the stock balance;
  •  To verify the physical existence of the stock;
  •  To inspect the general condition of the stock, this will assist in concluding whether the stock is correctly valued.
    Note that the auditor does not attend the stock take to count stock but to observe how the exercise is being carried out.

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