Doughtie’s Food Case
1. Gravin’s low inventory turnover rate in comparison to the other divisions is a red flag to auditors for two reasons. One, any significant analytical differences between divisions should be noted as suspicious and further looked into. Two, it could be caused by fictitious inventory reports, giving the auditors reason to believe that there may be fraud present. When planning the audit they should have considered inventory a high risk account and ensured substantial testing would be done with a higher than normal level of scrutiny. The existence and occurrence assertions should have been tested. Wilson and Pollard should have performed a physical count of the inventory on a significant sample size to