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However, the he disagreed with the assertion that PwC should have considered those heavy sales a red flag. Instead, he pointed out that PwC’s workpapers referred to the large, period-ending sales as a “traditional” trend in Campbell’s operating results.

This “traditional” trend may apply to Campbell’s business environment, but may not to other industry...

An auditor had better understand the industry environment he or she involves in to judge whether disproportionately sales near the end of quarterly reporting periods are normal or not.

Improper Accounting for Loading Discount

Whether PwC would remain a defendant was whether the audit firm realized that large trade discounts granted on period-ending sales were routinely recorded as SG&A expenses...

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