Problem
Accordingly, the auditors expanded their fieldwork, tracing customer payments back and forth between the subsidiary ledger and the general ledger. Their expanded work uncovered the fact that the location manager was stealing payments customers made on account. That is why the subsidiary ledger was out of balance with the general ledger. To cover up his theft, the manager debited the sales account, which was why the gross margins of the two stores were not aligned.
The staff auditor originally failed to give due consideration to the apparent warning signs of fraud. What are some of the more likely reasons why he either missed the red flags or failed to pursue them?