What is the primary reason for management's ability to easily overvalue inventory without rapid detection by auditors?
A) The limited volume of transactions in the inventory accounts.
B) The auditor's assessment of inventory as a low-risk area.
C) Complexity in the valuation of inventory.
D) Consideration by the auditor of non-financial indicators of inventory fraud.

Question

Quizplus · Accepted Answer

Inventory can be complex to value because it involves not only the physical counting of goods but also requires a valuation of the goods on hand, which can be impacted by various factors such as cost of production, market demand, obsolescence, and other economic factors. This complexity can create opportunities for management to manipulate inventory valuations, which may not be quickly detected by auditors.

What Is the Primary Reason for Management's Ability to Easily