In your year-end audit of The Joshua Redman Co., a defense contractor specializing in building sophisticated tracking systerns for missile defense systems, you bring in a specialist, Mal Waldron, to assist your valuation of work-in-process and finished goods inventory. Mal has conducted the same function for your audit of The Joshua Redman Co. for several years and is independent of the company. His reputation in the industry is excellent.

As long as Mal has performed this service for your audit firm, you have kept track of the inputs to the inventory account and you now believe you have built a statistical model of the inventory process of such quality that you can compare its results to those of Mal. Upon comparison, you notice that Mal's estimate of the amount in finished goods inventory is considerably higher than that of your model's. After some attempt at reconciling the two amounts, Mal holds firm on his estimate, claiming that a great deal of judgment goes into some of the lower-of-cost-or-market calculations and that the company's costing scheme is not necessarily accurate for the purposes of assigning overhead to individual products. Further complicating the matter is management's insistence that its finished goods inventory number-the highest of the three estimates-is accurate.

Discuss your responsibilities as this point. Specifically, determine what factors may be contributing to the difference between your estimate and Mal's, and discuss your options. Make a judgment and defend it.