Mark Jackson is the manager on the audit team for a new client, Central Companies (CC). CC

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Mark Jackson is the manager on the audit team for a new client, Central Companies (CC). CC is a home appliance and lighting retailer specializing in high-end kitchen equipment and specialty light fixtures. The client engaged Mark’s accounting firm in August 2025 in preparation for the December 31, 2025, audit. From January 2025 onward, CC has consistently paid its inventory suppliers late, well past the suppliers’ agreed-upon credit terms. Some suppliers are even demanding cash on delivery from CC and no longer extending credit. Mark is also aware from his review of correspondence between CC and its bank that the company has been experiencing cash flow problems since 2024.


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Discuss how this information impacts Mark’s assessment of planning materiality for CC.

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Auditing A Practical Approach With Data Analytics

ISBN: 9781119785996

2nd Edition

Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton

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