Question

The auditor performs preliminary analytical procedures to plan the audit. Results from the analytical procedures for the revenue process follow. In addition to the below questions, for each result, indicate how the auditor adjusts the audit program to gather evidence regarding the potential misstatements in the financial statements that could be suggested by the results from the analytical procedures.
a. The auditor compares the accounts receivable balance with the previous year’s balance and finds that it has decreased. What questions should the auditor ask? What misstatement could the auditor anticipate in the financial statements?
b. The auditor calculates the accounts receivable turnover for the current year and the previous year and finds that it decreased for the current year. What questions should the auditor ask? What misstatement could the auditor anticipate in the financial statements?
c. The auditor compares the balance in the Allowance for Doubtful Accounts for the current year and the previous year and finds that it has declined in the current year. What questions should the auditor ask? What misstatement could the auditor anticipate in the financial statements?
d. The auditor compares the balance in the Sales Returns account for the current and previous year and finds that it has increased. What questions should the auditor ask? What misstatement could the auditor anticipate in the financial statements?



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  • CreatedJanuary 22, 2015
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