Which of the following procedures would best detect the theft of valuable items from an inventory that consists of hundreds of different items selling for $1 to $10 and a few items selling for hundreds of dollars?
a. Maintain a perpetual inventory of only the more valuable items with frequent periodic verification of the validity of the perpetual inventory record.
b. Have an independent CPA firm prepare a report on the effectiveness of internal control over inventory.
c. Have separate warehouse space for the more valuable items with sequentially numbered tags.
d. Require an authorized officer's signature on all requisitions for the more valuable items.
Answer: A
CPA Exam
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