You have just performed an audit of your firm's inventory. You have observed the following problems:

1) The firm seldom performs an inventory count,

2) When counts are conducted, they are done by the manager of the inventory storeroom.

3) Inventory adjustments are made by the manager of the inventory storeroom.

4) There are no detailed inventory records - no breakdown of the various types of items comprising the inventory.

Describe the ethical and financial problems that exist. What are your recommendations?