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An audit on the inventory of Renato Company is being performed by M. Marcus, who is part of the audit team of Ted Partners, the external auditors of the Renato Company. Marcus decided to perform a stock count and arranged with the company to implement this work at the year end. He was concerned about the possibility that there were significant stock that were obsolete. He also decided to review the procedures that were used by the company to protect the stock. After discussions and observations, he made the following summary in his audit notes: 1 The company has implemented several controls. The store room was kept locked except during the lunch hour when the storeman left the door open, but left a tray for urgent requisitions to be placed. Production personnel could collect their own stock. This ensured production processes were not delayed. Requisitions required at least two signatures before the storeman would release any goods. These signatures could be any two personnel because the company believed this would reduce the possibility of theft and would require collusion. Any deliveries from purchased inventory were taken directly from the delivery van and placed on the shelves. The company regularly check stock levels against the ledger records, but in the interest of productivity improvements this task has been removed from the schedule of work. At the end of the auditor's summary of findings he concluded that there were material items of stock included in the inventory that were obsolete.' (a) What control weakness did Marcus come across during the course of his audit? (b) Marcus was concerned about obsolete stocks. What procedures should he have followed in determining obsolete stocks? (c) What actions should the auditor take based on his findings

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