Greg Norman is the auditor in charge of the Rogers Pharmaceutical Company audit. In assessing the internal controls for the company, Greg finds that the company bills customers and receives payments at three offices in three separate states using three different and incompatible software systems for tracking payments. Rogers’ terms of sale varies with the customer and varies from thirty days to ninety days. Open invoices are aged based on when they were booked to the receivables, but cash, chargebacks, or rebates are aged based on when they were applied to the account. Thus, a credit could be posted to the customer’s account when it was received, but the related invoice(s) remains open as a receivable and continues to age. Chargebacks are significant and linked to batch of product rather than invoice. Most similar companies have credit limits or credit checks but Rogers’ does not because all wholesalers are board certified M.D.’s, like the company’s founder.
Rogers’ total accounts receivable was $25,276,025.
Rogers’ total accounts receivable part due over sixty one days $17,434,500.
Rogers’ top-five wholesalers had accounts receivable of $13,457,516.
Rogers’ top-five wholesale customers had $5,428,850 past due over sixty-one days.
Rogers’ allowance for doubtful accounts of $266,000 did not include any estimates for the top-five wholesale customers, because it was management’s belief at the time was that the top-five wholesalers did not present a collection risk.

Required:
Based on these control issues and findings, explain some of the most likely sources of misstatement that exist.