I am thinking about acquiring an S-corp in California. After looking at their 1120S, I am concerned about their inventory accounting.

Although the COGS are accurate, the amount of Inventory listed is much lower than it should be. Because Inventory is listed too low, the amount of Purchases listed is much higher than it should be.

To summarize, COGS are accurate, but because Inventory is listed too low, Purchases are forced to be higher - so both the Inventory amounts & Purchases amounts are inaccurate.

What steps can I take to fix this once I acquire the S-corp?