During the audit of the revenue accounts for BlackWater Inc., a provider of specialty scuba gear and other underwater apparatus, it has been noted by the auditing firm, Johnson CPAs, that the client's revenue accounts are significantly higher than last year. It has also been noted that the client's inventory turnover ratio has decreased somewhat significantly since last year. Based on these facts and circumstances, the most appropriate exercise of professional skepticism would be

Group of answer choices

for the auditor to assume that because the client's sales have significantly increased, the client has likely also significantly increased their inventory purchases which would account for the decreased inventory turnover.

to investigate the reasons for the increase in sales and decrease in inventory turnover ratio, to attempt to understand and reconcile why these contradictory indicators exist. Both areas should be investigated by teams employed by the external auditors.

confirm with management that because revenue and sales are now higher, the corresponding increase in cost of goods sold has caused the decrease in the inventory turnover.

to advise the client's top management that an increase in revenue and demand coupled with a simultaneous decrease in inventory turnover appears contradictory, and request management investigate and formally report back the findings to the external auditor for inclusion in the audit report.