Please consider the five steps of the KPMG Judgment Framework. For each step, think carefully about what the auditors could have done to help detect the fraudulent activity related to the warranty reserve account at Hamilton Company. Please use the following questions to guide your critical thinking about this case:
Consider the various alternatives that should be thought about when auditing the warranty reserve account at Hamilton. To do so, please ask yourself about each of the alternatives that are reasonably possible, even when they might contradict the client’s point of view. Are there any external factors that should be considered?