Question 3 Your audit firm is the auditor ofSpeighstown Garden Centre, which operates a large centre that sellsplants, garden furniture (e.g. outdoor benches) and gardenequipment (e.g. lawn mowers). The inventory system is up-to-date;the records are well maintained and the year end quantities areused to determine the inventory value. The inventory countinstructions are shown below: (1) The inventory count willsupervised by the Financial Controller and will take place on 31August 2012. The count will begin at 7am. The centre will be closedon the day of the count, but if any of the large customers likehotels require a rush order, they will be accommodated. One memberof the Accounts Department will be assigned to each area along witha member of the garden staff. There will be computer producedsheets showing the quantities of each item from the system. TheFinancial Controller will distribute and collect back the forms atthe end of the count. Where the amount observed is different to theamount on the sheet, it will be crossed out and the new amountwritten in pencil. (111) The Financial Controller will then carryout test counts on five items in each area that has been counted.Where an error is found, the area will be re-counted. (iv) Thequantity for any inventory that looks damaged or unsaleable shouldbe crossed out and allotted a quantity of zero. Once all the sheetshave been collected and test counts completed, the FinancialController will manually update the computerised system to reflectthe counted quantities. After the system has been updated, thecount sheets are discarded. Required: Identify and explain FIVEdeficiencies in the inventory counting system that can behighlighted in the instructions from Speighstown Garden Centre. Foreach deficiency suggest how it could be overcome.
