You are scheduled to be present for the inventory observation of one of your manufacturing audit clients. During the observation, you noticed the following:

1. Some of the employees who were counting the inventory stopped to load a truck for shipment.
2. During test counts, you noticed that the expiration date of a large bin of items was two years old. When you questioned the client, the inventory manager told you that he/she felt the company could still sell the items.
3. At the end of the day, a large shipment was received. It was not included in the count.

Prepare a report discussing the following:

• The procedures you should perform before going on-site for the inventory observation.
• Based on this preliminary review of the client’s inventory, you determine that there is a significant risk of material misstatement and/or fraud. Discuss what changes you will make to the normal observation process based on this information.
• The procedures you will take to address each of the issues noted during the observation.

Your report should meet the following criteria:

• Be 3-4 pages in length, not including the title and references pages.
• Demonstrate your comprehension of the course material.
• Use professional business language.
• Be formatted according to APA
• Include 2-3 sources

Review the grading rubric to see how you will be graded for this assignment.