1)Assume that you are a forensic accountant consulting for the Mixed Veggies Company. The company has been suffering inventory losses for unknown reasons. Every inventory count for the last five years has shown a significant shortage. The CEO and controller have been debating possible causes for the problem including everything from theft to accounting errors. The controller thinks the investigation should take place strictly within the inventory department. The CEO, on the other hand, things a much broader investigation is needed and should include sales and billing. Given the information you have, state whether you agree with the CEO or the controller. Explain your position.

2)Remco Gourmet Water Company produces and distributes bottled water in a variety of natural flavors. Jan Cancel, a partner in a local CPA firm, is conducting the first-time-ever audit of Remco. On the second day of her audit, she discovers that the CEO has acquired a large-screen television, a speed boat, and a Jacuzzi for his personal use. All three items were delivered to the CEOs personal residence, and they were booked into the accounting records as consulting expenses. Jan examined Remcos most recent federal tax return and noticed that the items had been included in deductible consulting expenses.

a. What should Jan Cancel do about her finding?

b. What impact should the finding have on how she proceeds with the audit?

c. What impact should the finding have on her audit opinion report?