(a) The auditors considered Phar-Mor to be an inherently "high risk" client. List several factors at Phar-Mor that would have contributed to a high inherent risk assessment.
(b) Should auditors have equal responsibility to detect material misstatements due to errors and fraud?
(c) Which conditions, attitudes, and motivations at Phar-Mor that created an environment conducive for fraud could have been identified as red flags by the external auditors?