Physical verification of inventories is the responsibility of management of the entity. However, where the inventories are material and the auditor are placing reliance upon the physical count the management, it may be appropriate for the auditor to attend the stock taking. The extent of auditor’s attendance at stock taking would depend upon his assessment of efficacy of relevant internal control procedures, and the result of his examination of the stock records maintained the entity and of the analytical review procedures. There are two principal methods of stock taking; periodic stock taking and continuous stock taking. Under the first method, physical verification of inventories are carried out at a single point of time, usually at the year end. Under the second method, physical verification is carried out throughout the year with different items of inventory being physically verified at different points of time. The continuous stock taking method is effective when a perpetual inventory system of record keeping is also in existence.