Certified Internal Auditor (CIA) Part 3: Business Knowledge for Internal Auditing — Question 17

What must be monitored in order to manage risk of consumer product inventory obsolescence?
1. Inventory balances.
2. Market share forecasts.
3. Sales returns.
4. Sales trends.

Answer options

• A. 1 only
• B. 4 only
• C. 1 and 4 only
• D. 1, 2, and 3 only

Correct answer: C

Explanation

To effectively manage the risk of obsolescence in consumer product inventory, both inventory balances and sales trends must be closely monitored. Inventory balances provide insight into stock levels, while sales trends indicate demand patterns, making option C, which includes both factors, the correct choice. Options A, B, and D are incorrect as they do not encompass the necessary combination of factors to address the risk comprehensively.