Audit and Assurance Practice Exam 2025 – The Complete All-in-One Guide for Exam Success!

The statement is true because the audit of inventory can indeed be complex due to several factors, including its transportability and the possibility of being spread across multiple locations. Inventory often involves goods that are carried from various suppliers, stored in different warehouses, or present at retail locations. This can complicate the audit process, as it necessitates tracking and verifying items in various physical locations, which may vary in terms of accessibility, security, and record-keeping systems.

Additionally, the transportability of inventory adds another layer of difficulty; goods may change locations frequently, and auditors must keep up with these changes to ensure accurate inventory counts and valuations. Auditors might have to conduct physical counts and verify the existence and condition of inventory at different points in time, especially if there are significant movements in and out of inventory.

Moreover, different types of inventory, such as raw materials, work-in-progress, and finished goods, can possess unique characteristics that affect the audit process. For example, perishable goods may require more frequent counts due to their limited shelf life, while high-value or high-risk items may need to be examined with greater scrutiny to prevent theft or loss. Thus, understanding the complexities involved in inventory auditing underscore the truth of the statement.