There are a number of fraud risks associated with inventory. Additionally, inventory is a complex accounting and auditing area for a number of reasons. This question relates only to the fraud risks associated with inventory.

Select the items that relate directly to fraud risks associated with inventory. Check all that apply.

a. Schemes to classify expenses as assets

b. Inventory is easily transportable

c. Employee theft of inventory

d. Large manual adjustments to inventory accounts

e. Executives misusing travel and entertainment accounts and charging them as company expense

f. Inventory often exists at multiple locations with some locations being remote from the companys headquarters

g. Inventory shrinkage, which is a reduction in inventory presumed to be due to physical loss or theft

h. Identifying obsolete inventory and applying the lower of cost or market principle to determine valuation are difficult

i. Inventory accounts may be valued according to various accounting valuation methods

j. Employee schemes involving fictitious vendors as means to transfer payments to themselves

k. Executives recording fictitious inventory or inappropriately recording higher values for existing inventory by creating false records for items that do not exist

l. Inventory accounts typically experience a high volume of activity