From the e-Activity, determine the main reasons why several members of top management in Phar-Mor perpetrated the financial statement fraud. Next, recommend one (1) strategy that the auditors might have taken to detect or prevent the fraud. Provide a rationale to support your recommendation.

Several members of top management in Phar-Mor committed financial statement fraud because they believed that Monus, President of Phar-Mor would be able to get them out of debt. Monus embezzled 10 million in funds from Phar-Mor to cover losses incurred by the WBL. Monus started inflating inventory to increase the assets on the books.

The auditors should have randomly chosen the stores in which they were doing the inventory counts. Also, they should not tell management in advance which...