An anonymous source advised Canada Revenue Agency (CRA) that Jim Mayers, owner of Mayers Grocery Store, has been filing fraudulent tax returns for the past several years. You, a tax auditor with the CRA, are in the process of auditing Mayers Grocery Store for the year ended December 31, 2017. The tax returns for the past five years show a decreasing value for ending inventory from 2014, when Mayers bought the business, to 2016; the return for 2017 shows the same sort of decrease. You have performed a quick survey of the large store and the attached warehouse and observed that both seemed very well stocked.
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Does the information set forth above suggest anything to you that might confirm the anonymous tip? What would you do to confirm or deny your suspicions?