The auditor should first obtain additional information from the asset manager to understand why physically existing assets are missing from the accounting records. Internal auditing requires conclusions to be based on relevant, reliable, and sufficient evidence rather than assumptions. The observed condition suggests the equipment has existed for some time, but the auditor does not yet know whether the omission results from an accounting error, acquisition process weakness, transferred assets, donated equipment, or another cause. Option A prematurely assumes possible theft, while option B focuses on overstated assets even though the observation initially suggests potential understatement or incomplete records. Option D also moves directly to a management decision without establishing the facts. Inquiry followed by appropriate corroborating procedures is therefore the logical first step.