You are the controller of Emjay Inc. M. J. Danner, the president, recently mentioned to you that she found an error in the 2011 financial statements which she believes has corrected itself. She determined, in discussions with the purchasing department, that 2011 ending inventory was overstated by $1 million. M. J. says that the 2012 ending inventory is correct, and she assumes that 2012 income is correct. M. J. says to you, “What happened has happened—there"s no point in worrying about it anymore.”
You conclude that M. J. is incorrect. Write a brief, tactful memo to her, clarifying the situation.