An anonymous source advised Canada Revenue Agency (CRA) that Jim Chaney, owner of Chaney Grocery Store, has been filing fraudulent tax returns for the past several years. You, a tax auditor with CRA, are in the process of auditing Chaney Grocery Store for the year ended December 31, 2014. The tax returns for the past five years show a decreasing value for ending inventory from 2010, when Chaney bought the business, to 2013; the return for 2014 shows the same sort of decrease. You have performed a quick survey of the large store and the attached warehouse and observed that both seemed very well stocked.
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Does the information set forth above suggest anything to you that might confirm the anonymous tip? What would you do to confirm or deny your suspicions?