The following are facts about a subsidiary:

The subsidiary has been in business for several years and enjoyed good profit margins although the general economy was in a recession, which

affected competitors.

The working capital ratio has declined from a healthy $3$:$1$ to $0\mathrm{.}9$:$1.$

Turnover for the last several years has included three controllers, two supervisors of accounts receivable, four payables supervisors, and numerous

staff in other financial positions.

Purchasing policy requires three bids. However, the supervisor of purchasing at the subsidiary has instituted a policy of sole$-$source procurement to

reduce the number of suppliers.

When conducting a financial audit of the subsidiary, the internal auditor should

A$.$ Most likely not detect $1,2$ or $3.$

B$.$ Ignore $2$ since the economy had a downturn during this period.

C$.$ Consider $3$ to be normal turnover, but be concerned about $2$ and $4$ as warning signals of fraud.

D$.$ Consider $1,2,3$ and $4$ as warning signals of fraud.