Mary Smith, a new staff auditor, has been assigned to interview Mad Dog Clancy, controller, about variations between expected and book amounts noted in performing analytical procedures as substantive tests. The interview went as follows:

Mary: Good morning, Mr. Clancy.

MAD DOG: What's good about it?

MarY: Well, not much, I suppose. I would like to talk with you about some potential errors in your financial statements.

Mad DoG: Errors! What do you mean "errors"? What errors are you talking about?

Mary: I'm referring to the fact that your revenue increased 15 percent this year, but the quantity shipped was not significantly different from last year and unit prices didn't change. How do you explain that?

Mad Dog: The answer is so simple that even a high school student should see it. While total quantities and individual prices didn't change, the mix of high- and low-priced items did change. We sold more of our more expensive products. Didn't you learn anything at that university you attended?

MARY: Well, that does seem like a logical explanation. I'll check it out. But I also would like to know why your freight expense is lower this year than last year.

MAD DOG: Mary, can't you put two plus two together and get four? You were in here yesterday asking about the increase in our equipment account, and I told you that we purchased our own trucks for delivery so we could save money from paying contract truckers. When is your firm going to start hiring people with some business sense?

MARY: Oh yes, I remember that now. I just didn't put the two together. Let me ask you about the decline in your inventory turnover. Was that caused by a deliberate inventory increase in anticipation of a large sales campaign this spring?

Mad Dog: Yeah, that's as good an answer as any. Now look, I have my own work to do, and I don't have any more time to talk with you.

MarY: That's all the help I need right now. I'll just check out your answers to be sure you are telling the truth. If I have any other problems I'll get back to you.

MAD DoG: I can hardly wait.

Required:

a. Evaluate Mary's interview techniques. What was wrong with each of Mary's statements or questions?

b. Except for her greeting, reword in an appropriate way each of Mary's statements or questions.

c. How do you discuss auditing matters with a disagreeable client?