(a) The auditors considered Phar-Mor to be an inherently ‘high risk’ client. Briefly discuss two factors at Phar-Mor that would have contributed to a high inherent risk assessment. (4pts)
(b)Inventory had been identified as being a specifically high-risk area. How should this have affected how the Coopers auditors carried out the audit of inventory? (consider timing, nature and extent of tests) (5pts)
7. In the case there are several references to instances where Coopers selected a specific number of items (used sampling techniques) to test.
(a) Comment on the appropriateness of the samples tested (size, relevance, sampling methods) (5pts)
8. Regarding Inventory compilations, Coopers was able to prove that none of the compilations they had selected for extensive review had contained fraudulent entries.
(a) In light of this, discuss the importance of audit documentation. (3pts)
(b) Identify and briefly explain two other instances in the Phar-Mor Case where better audit documentation could have helped Coopers in their defense. (4pts)
8. Read the plaintiffs courtroom strategy. Explain why you think the plaintiff chose to make the argument that they did. (4pts)
