Identify and evaluate key accounting measures for the company's business (e.g., product defects after sale and warranty expenses for manufacturing firms, research and development expenses to sales ratio for pharmaceutical companies, etc.) Assess accounting flexibility: How much flexibility does a manager have determining the key accounting measures identified in 3A? Evaluate accounting strategy: How do the firm's accounting policies compare to the norms in the industry? Identify potential red flags (e.g., Unusual increases in accounting receivables or inventories in relation to sales, increases in the gap between net income and cash flows, unexpected large asset write-offs, qualified audit opinions or changes in independent auditors that are not well justified, USE of financing mechanisms such as R