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1) Advantage of roll-back could be accurate audit will be possible because inventory counting will be conducted with auditors in subsequent time when possibly restrictions are lifted, and auditors are able to participate physical count. However, for that method, nobody knows that when that exact date will be and during the period, accuracy and existence are questionable and cannot provide unqualified opinion if the inventory is material to the financial statement of the company.

Roll-forward method can be very traditional, and if the management has well-organized perpetual inventory system, then roll-forward might work well. It can be calculated by the evidence from sales record and purchase record, and ending balance of inventory will be easily calculated from the actual physical inventory. However, it is hard to guarantee that there is no missing inventory or not recorded inventory if the auditor cannot actually see and count. Furthermore, if the inventory is material to the company, responsibility of an auditor will increase to verify that all the inventory was properly recorded, and the management’s perpetual inventory system works well.

Advantage of the video observation will be convenience and accuracy. The auditor actually can see that the inventory is there and participate the counting. Of course, it will be hard to find 3rd party or not related person to the inventory related progress at all from the management to hold the camera, and that could be one disadvantage of using video observation. Another disadvantage can be limitation of video communication. It must be live in my opinion because technology is more than amazing and recorded video will have high risk to be edited. Then, the auditor and the management should have some well-designed promise to keep the virtual inventory counting more effective and efficient.

There are lots of discussions about new-normal, and I agree with the new normal. We were uncomfortable when we became to work virtually, and some features are still not enough to be normal, but people adopted and get used to the new way to accomplish the goal, and technology is getting more and more quickly to satisfy the needs. In person is always accurate and desirable in many professional fields but expensive. For accounting industry, accuracy and existence is very important assertion, so I do not believe that the industry will remain 100% virtual, but the technology will find the way to be I believe.

2) Auditors must utilize alternative procedures when they are unable to access inventory physically. One procedure auditors use is the rollforward, or rollback, method. The rollforward method relies on the cycle count procedure performed by companies. A cycle count procedure is a system in which the client conducts physical counts of their own inventory on a periodic basis, usually quarterly. The auditors may use the most recent cycle count and roll that count forward, using sales and purchases for the period. Using the rollback method, the auditors and the client determine if they can postpone the physical inventory count to a later date. The physical count would then be rolled back to year-end, using sales and purchase transactions that occured after year-end. An advantage of these procedures would be that they are easy to implement. Auditors have had to perform similar procedures, so rolling back or rolling forward the inventory counts would not be a challenge for them. A disadvantage of this method would be that it relies heavily on the client. For these methods, the auditor would rely on the internal control of the business to confirm that the inventory exists and transactions actually occured. Another alternative procedure auditors can use when they are not allowed to be present for the count is a video observation. The advantage of this method is that with the advancements in technology, the auditor can verify the video is a live feed and confirm the authenticity of the recording. With devices such as Go-Pros, recording the counting of inventory can be done easily by the client. The disadvantage of this method is that it would be difficult to observe the physical condition of the inventory without physically observing it. Another disadvantage would be determining who should be the one recording the count. 

I believe that the video observation will continue to be utilized in the post-COVID era. The auditors can determine the authenticity of the video by confirming the recording is a live feed. With the variety of video capabilities, auditors can ensure that the video observation is an accurate presentation of the inventory count. An auditor being present for a live recording would have very little differences with them being physically present for the count.