Your firm has been appointed as the statutory auditors of GBM Private Limited for the financial
year 2017-18. While verification of company’s inventories as on 31st March 2018 you found that
the significant amount of inventories belonging to the company are held by other parties.
However, the company has kept all the records of the inventories maintained by other parties,
what is your duty as an auditor in order to ensure that third parties are not such with whom the
stock should not be held, and the stock as disclosed in company’s records actually belongs to
them?

a)** **Ensure that the total stock including the stock with third party tally with the stock register
maintained by the company.

b)** **Obtain confirmation from the third party/s with whom the inventories of the company are
held and reconcile the same with stock register.

c)** **Conduct a physical verification of stock maintained with third party/s.

d)** **Obtain a written confirmation from the departmental head of the company for the
inventories maintained at other places as audit evidence.