Inventory Count Process

You are an audit senior in Staple and Co and you are planning the audit of Gloss Co for the year ending 31 August 20X0. Gloss Co is a paint manufacturer and has been trading for over 50 years. It operates from one central site, which includes the production facility, warehouse and administration offices. To avoid the disruption of a year-end inventory count, Gloss Co has this year introduced a continuous/perpetual inventory counting system. A timetable of inventory counts is to be maintained and regularly reviewed.

The following inventory counting processes have been implemented by Gloss Co:

1. The team prints the inventory quantities and descriptions from the system and these records are then compared to the inventory physically present.

2. Any discrepancies in relation to quantities are noted on the inventory sheets, including any items not listed on the sheets but present in the warehouse area.

3. Any damaged or old items are noted and they are removed from the inventory sheets.

4. During the counts there will continue to be inventory movements with goods arriving and leaving the warehouse.

5. Inventory belonging to third parties is removed from the warehouse before the count commences and kept in a separate location.

Q.Select whether the inventory count processes described represent strengths or deficiencies?

It is from my Kaplan Revision Kit. The answers says that the 1st process is Deficient.
Why it is deficient ?