New Management plc is a pharmaceutical company selling to wholesalers and retail pharmacies. The new CEO was appointed at the start of the financial year and was full of enthusiasm. For the first six months her new ideas created a 10% increase in sales and then the economy crashed as the government cut spending and monetary policy was tightened. Sales dropped 20% as customers had slower sales and were required by their banks to reduce their overdrafts. A new strategy was adopted in the last two months of the year. Sales representatives were told to sell on the basis that customers would not have to pay for three months, by which time they would have sold the stock.

They were also told that if sales for the month to that customer were not 5% higher than the sales for the corresponding month for the previous year, they could say to the customer, off the record of course, that they could return any unsold stock after four months. In the last two months of the financial year sales were up 10 and 11% on the respective previous corresponding periods. The first month of the new financial year recorded a 10% drop in sales.

Required:

Critically discuss from the point of view of (a) an investor, (b) the auditor and (c) the CEO.