Refer to the Auditing in Practice feature Examples of Fraud
Refer to the Auditing in Practice feature "Examples of Fraud in the Physical Observation of Inventory." The AICPA's Practice Alert described in the feature provides examples of many types of inventory frauds that have occurred. Access and read the following article that describes how to detect these types of frauds:
http://www.journalofaccountancy.com/Issues/2001/Jun/GhostGoods HowToSpotPhantomInventory.htm
a. What are the four techniques that companies use to commit inventory fraud?
b. What analytical procedures may indicate inventory fraud?
c. Who are the most common perpetrators of inventory fraud?
d. List at least five indicators of heightened risk for inventory fraud.

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