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Approximately 10% of the space in the finished goods warehouse has been rented out to third parties with similar operations. For completeness, the counters have been asked to count the inventory for all bays noting the third party inventories on separate, blank inventory sheets, and the finance department will make nay necessary adjustments.
For this control deficiency, the following explanation is given
There is a risk that these goods may not be correctly removed from the inventory count sheets, resulting in inventory being overstated.
Why is it mentioned that inventory is not correctly removed from the inventory count sheets when the third party inventory is not recorded on the inventory count sheets and instead it is recoded on blank inventory sheets
All inventory sheets start out as “blank” …. they are all collected at the end of the count. There is simply a risk (however small) that those recording 3P inventories might find their way into the inventory valuation.
How will third party inventories find their way into the inventory valuation
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