diff --git a/app/controllers/audits_controller.rb b/app/controllers/audits_controller.rb
index 5cb0f22d8b..8d68291cee 100644
--- a/app/controllers/audits_controller.rb
+++ b/app/controllers/audits_controller.rb
@@ -10,7 +10,7 @@ def index
   end
 
   def show
-    @items = View::Inventory.items_for_location(@audit.storage_location)
+    @items = View::Inventory.items_for_location(@audit.storage_location, include_omitted: true)
   end
 
   def edit
@@ -93,7 +93,7 @@ def set_storage_locations
   end
 
   def set_items
-    @items = current_organization.items.alphabetized
+    @items = current_organization.items.where(active: true).alphabetized
   end
 
   def save_audit_status_and_redirect(params)
diff --git a/app/views/audits/_form.html.erb b/app/views/audits/_form.html.erb
index d9014cae5f..8cb798a588 100644
--- a/app/views/audits/_form.html.erb
+++ b/app/views/audits/_form.html.erb
@@ -14,7 +14,7 @@
               </div>
               <div class="box-body">
                 <%= simple_form_for @audit, data: { controller: "form-input" }, html: {class: "storage-location-required"} do |f| %>
-                  <%= render partial: "storage_locations/source", object: f, locals: { label: "Storage location", error: "What storage location are you auditing?" } %>
+                  <%= render partial: "storage_locations/source", object: f, locals: { label: "Storage location", error: "What storage location are you auditing?", include_omitted_items: true } %>
                   <fieldset style="margin-bottom: 2rem;">
                     <legend>Items in this audit</legend>
                     <div id="audit_line_items" class="line-item-fields" data-capture-barcode="true">
diff --git a/spec/requests/audits_requests_spec.rb b/spec/requests/audits_requests_spec.rb
index 80d21de719..61ad5a38a8 100644
--- a/spec/requests/audits_requests_spec.rb
+++ b/spec/requests/audits_requests_spec.rb
@@ -50,6 +50,21 @@
         get new_audit_path
         expect(response).to be_successful
       end
+
+      it 'only includes active items in the line item select dropdown' do
+        create(:item, name: "TestActiveItem", organization: organization)
+        create(:item, name: "TestInactiveItem", organization: organization, active: false)
+
+        get new_audit_path
+        expect(response).to have_http_status(:ok)
+
+        html = Nokogiri::HTML(response.body)
+        options = html.css('select[name="audit[line_items_attributes][0][item_id]"] option')
+        option_values = options.map { |option| option.text.strip }
+
+        expect(option_values).to include('TestActiveItem')
+        expect(option_values).not_to include('TestInactiveItem')
+      end
     end
 
     describe "GET #edit" do
diff --git a/spec/system/audit_system_spec.rb b/spec/system/audit_system_spec.rb
index 92df751ae5..69a0218ece 100644
--- a/spec/system/audit_system_spec.rb
+++ b/spec/system/audit_system_spec.rb
@@ -68,6 +68,36 @@
           end
         end
 
+        it "allows auditing items that are not in a storage location", :js do
+          item = create(:item, name: "TestItemNotInStorageLocation", organization: organization)
+          audit_quantity = 1234
+          visit new_audit_path
+
+          await_select2("#audit_line_items_attributes_0_item_id") do
+            select storage_location.name, from: "Storage location"
+          end
+          select item.name, from: "audit_line_items_attributes_0_item_id"
+          fill_in "audit_line_items_attributes_0_quantity", with: audit_quantity
+
+          accept_confirm do
+            click_button "Confirm Audit"
+          end
+          expect(page.find(".alert-info")).to have_content "Audit is confirmed"
+          expect(page).to have_content(item.name)
+          expect(page).to have_content(audit_quantity)
+
+          accept_confirm do
+            click_link "Finalize Audit"
+          end
+          expect(page.find(".alert-info")).to have_content "Audit is Finalized"
+
+          event = Event.last
+          expect(event.type).to eq "AuditEvent"
+          event_line_item = Event.last.data.items.first
+          expect(event_line_item.item_id).to eq item.id
+          expect(event_line_item.quantity).to eq audit_quantity
+        end
+
         it "allows user to add items that do not yet have a barcode", :js do
           item_without_barcode = create(:item)
           new_barcode = "00000000"