An internal auditor has been asked to investigate inventory control because of recent reports indicating that inventory turnover figures have fluctuated substantially and differ greatly from competitors' experiences. Inquiry procedures as to what has changed with respect to sales, shipping, or inventory management policies have uncovered only one significant change. Two new, major customers have requested drop shipments (i.e., direct shipments via our suppliers - since our enterprise is a wholesale operation).

Required:

a. How could this relate to the inventory turnover statistics that were recently reported?

b. What type of evidence needs to be collected to verify such a relationship? Be specific.