Design a test of control to determine whether the control is operating effectively.

The Frist Corporation has the following internal controls related to inventory:
1. Only authorized inventory and warehousing personnel are allowed in inventory stor-
age areas.
2. All inventory products are stored in warehousing areas that are segregated from other storage areas used to house equipment and supplies.
3. All inventory held on consignment at Frist Corporation is stored in a separate area of the warehouse.
4. The inventory purchasing system only allows purchases from preapproved vendors.
5. The perpetual inventory system tracks the average number of days each inventory
product number has been in the warehouse.
6. Microchips are embedded in each product and when inventory items are removed
from the warehouse to shipping, radio-frequencies signal a deduction of inventory to
the perpetual inventory system.
7. On a weekly basis, inventory accounting personnel take samples of inventory prod-
ucts selected from the perpetual inventory system and verify that the inventory is on
hand in the warehouse and that the quantities in the listing are correct.
8. On a weekly basis, inventory accounting personnel select inventory items on hand in
the warehouse and verify that the item is included in the perpetual inventory listing
at the correct amount.
9. The perpetual inventory system subtotals the quantity of inventory in the system and
interfaces with the general ledger system on a daily basis to ensure quantities agree.
10. The perpetual inventory system will not accept inventory additions without the re-
cording on a valid receiving report.
For each of the internal controls:
a. Identify the related transaction-related audit objective(s) affected by the control.
b. Describe risks the control is designed to mitigate.
c. Design a test of control to determine whether the control is operating effectively.

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