Audit Strategy Practice Test

You are the auditor of an issuer performing an integrated audit of a company with significant inventory held at third-party logistics providers. The company uses perpetual inventory records and cycle counts, but has had reconciliation issues between warehouse reports and the general ledger. Which factor should the auditor prioritize when developing the audit strategy?

You are the auditor of a nonissuer performing a financial statement audit of a regional grocery distributor. During planning, management indicates inflation and supplier shortages have caused frequent price changes and increased use of manual overrides to update standard costs, and the entity is close to violating a debt covenant tied to gross margin. Based on the entity's conditions, what strategy adjustment is most appropriate?