You are the controller of Small Toys Inc. Janice LeMay, the president, recently mentioned to you that she found an error in the 2011 financial statements which she believes has corrected itself. She determined, in discussions with the Purchasing Department, that 2011 ending inventory was overstated by $1 million. Janice says that the 2012 ending inventory is correct. Thus, she assumes that 2012 income is correct. Janice says to you, “What happened has happened—there’s no point in worrying about it anymore.”

Instructions
You conclude that Janice is incorrect. Write a brief, tactful memo to Janice, clarifying the situation.