Case 1: Audit evidence case

Nefret Stores is a large discount cosmetic department store chain. The company has recently expanded from 5 to 15 stores by borrowing from several large financial institutions and from a public offering of common stock. A recent investigation has disclosed that Nefret materially overstated net income. The company understated their accounts payable and recorded fictitious supplier credits that further reduced accounts payable. As a result, an Income & Sales Tax Department investigation was critical of the evidence gathered by Nefrets audit firm, Abdul & El-Emir, in testing accounts payable and the supplier credits.

Identify deficiencies in the sufficiency and appropriateness of the evidence gathered in the audit of accounts payable of Nefret Stores.