The most reliable procedure for an auditor to use to test the existence of a client's inventory at an outside location would be to Observe physical counts of the inventory items.
When auditing public warehouses, the primary process for disclosing unrecognized liabilities is the inspection of incoming and outgoing transactions. Dispatch orders and receipt reports that are not reflected in the records indicate that the transaction was not recorded properly.
The auditor will talk with the customer according to the enumeration procedure, observe the enumeration, make test counts of some inventory items, trace those counts back to the quantity recorded by the customer, and check all inventory enumeration labels.
Auditors often perform this inventory check randomly. This is a balancing act between the cost of inventory shipped and the number of products shipped. Confirm that the item was not shipped with the wrong amount.
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