In a supplier audit, what are some of the red flags that could indicate potential supplier's problems?

What will be an ideal response?

Answer: (1) A large percentage of the supplier's gross sales was to the company conducting the supplier audit. (2) The supplier's pricing methods differ from standard industry practice. (3) The supplier does not own the equipment it rents but is itself renting that equipment from a third party. (4) Entertainment expenses are high in terms of a percentage of the supplier's gross sales. (5) The supplier submits altered or fictitious third-party invoices. (6) The supplier's address on its invoices is fictitious.