For each of the following situations: (1) determine whether an employee fraud or a management fraud has likely been committed, (2) discuss the likelihood that the auditor will discover the fraud under ordinary circumstances, and (3) discuss the implications for the audit if the fraud is not found.

a. A part-time employee of a grocery store sneaks top-graded meats to his friends through the back door.

b. In an attempt to win a sales contest based on submitted applications, an insurance salesman enters an application for life insurance for significantly more coverage than the customer requested. When the contest ends in a few days, he will tell the underwriting department he made a mistake and will lower the request.

c. To avoid breaking a debt covenant based on net income figures, the CFO changes from the LIFO to the FIFO inventory method and does not disclose this change of accounting policy.

d. Managers of a copier service operation are using the company's fleet of cars for personal use.

e. Right before the end of the year, management of a prerecorded music distribution operation authorizes a large shipment of CDs to its retail outlet customers under terms that allow the outlets to return any unsold recordings. The distributor books the entire shipment as revenue at the normal selling price.

f. Although there is some evidence that some inventory on the books has decreased in net realizable value so that it ought to be written down, management defers the decision until after the next reporting period.

g. The plant manager of a manufacturing operation regularly takes tools home for his personal use. He has not returned many of them.

h. The vice president of finance convinces the CEO not to disclose to the board of directors the details of the deteriorating position of a bond portfolio held for investment.