You keep looking
over the Green Company’s financial statements to see where your analysis is
going wrong. You are certain that the company is not experiencing revenue
growth that would support the consistent increase in the inventories that are
being reflected on the balance sheet. You just finished a comprehensive audit
of all the physical controls of inventory, so you doubt that inventory is being
stolen. Everything else in the financials seems to look fine. In fact, they
seem to indicate that the company is improving in profitability.
Using both the
required text and external resources, address each of the questions below. Your
responses should range between 2-4 strong paragraphs for each question, with
references appropriately cited. Visuals (tables, charts, graphs) are encouraged
as a tool in summarizing major points.
- What might be a valid reason
for the increase in Green Company’s inventory cost?
- Assuming that fraud is being
committed, how could a fraud perpetrator commit this type of fraud?
- What could be done to prevent
this type of fraud?