The popular press has indicated that inventory fraud is one of the biggest reasons for the proliferation of accounting scandals. (a) Name two other high profile cases where a company has committed fraud by misstating inventory. (b) What makes the intentional misstatement of inventory difficult to detect? How was Phar-Mor successful in fooling Coopers&Lybrand for several years with overstated inventory? (c) To help prevent or detect the overstatement of inventory, what are some audit procedures that could be effectively employed?
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