Ms. Fatima is having a business and she wants to know the financial status of the business so, she decided to hire external auditor. The auditor Mr. Assad, pointed the highlights of his audit report: (1) inventories and receivable management are not properly done , (2) collection strategy is very poor (3) also the current asset management is not handled very well.

Based on the above scenario:

1. Justify how GAAP can be applied in the Company of Ms. Fatima.

2. If you were Mr. Assad, design a doable recommendations on how Ms. Fatima can resolve the issues revealed in the audit findings?