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How to test inventory for completeness?

Most companies perform a full physical inventory observation at the end of each year. The inventory listing, which lists out all of the items in the warehouse, supports the inventory balance on the balance sheet.

To test the completeness of the inventory listing, the audit team should walk around the warehouse and identify random inventory count tags and verify that they are included on the inventory listing. If all of the tags selected are included on the inventory listing, then the audit team has reasonable assurance that the inventory listing is complete.

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