"- Since Metcash has a chain of stores, there is frequent transportation of goods that areshipped from one chain to another in order to rotate stock. In this situation, auditorsmust check if these shipments are falsely recorded as ‘sales’ to increase revenue.3. Expense AccountOne of the most common ways to manipulate a financial statement is in the expenseaccount (Marasco, 2012). In the cases of retail chains, gas station companies, etc.,auditors should be extra cautious while conducting an audit of their financial statements.The fraud usually happens when the recording of expenses is postponed until the nextperiod(Louwers, 2007). For Metcash, it is seen that the there is a very high chance of this fraud beingimplemented. All chain operating for this company order for good from the supplier to bebrought in to their stores and the supplier provides an invoice to Metcash (Low, 2015).This invoice is ideally, according to accounting standards, supposed to be entered intoMetcash’s expense account. However, there is a possibility that they hold it in their inboxuntil the next period starts, in order to show a more favorable figure in their financialstatement.4. Account Receivable AccountAccount receivable accounts are kept in order to record amounts to are expected to bepaid. In an audit perspective, it important to be aware that companies can manipulatetheir account receivable account to show sweeter figures to their investors andshareholders (ACFE, 2016).12 | P A G E Metcash primarily deals with fast moving consumer goods in their supermarket andalcohol chains and thus do not have receivables as customers pay for items purchased onthe spot. However, in their automotive division, they do maintain accounts receivablesaccount and thus making it likely to manipulate.Auditors also have to keep in mind of the recent sale of Metcash’s automotive sector toBurson (Houspian, 2016) and that all records of their receivables are in order and notcontain fraudulent amounts.13 | P A G E 4. Reliance on Control EnvironmentThe audit committee, the internal auditors, as well as the external auditors all play animportant role with respect to the governance of any organization.AuditCommittee TRINITY Internal ExternalAuditors AuditorsFigure 4: The auditing trinityMetcash has continually delivered best practice in regards to corporate governance. Inrelation with their overall control environment, there is potential reliance that can beplaced based on the following factors:1. Effective Management of Financial and Other Material Business Risks – Due to itssize and diversity in its business operations, Metcash can better monitor the areas oftheir financial, compliance and operating risk and ensure that the management iseffectively managing risks (Metcash, 2016).2. Reliable Management and Financial Reporting – Although Metcash reviews theirhalf and full year statements before their release, they must have better controls in14 | P A G E "