Consider Manny Corp., our military outfitting operation from Chapter 10.

Its financial data is reprinted here for convenience.

a. If you were the auditor assigned to perform substantive analytical procedures on expenses, describe the management assertions you would be hoping to support and for which accounts.

b. What techniques and variables would you employ in your analysis?

c. Suppose your analysis indicated that depreciation expense was reported to be lower than your prediction. What implications would this have for your audit?

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Cash Accounts Receivable Inventories Fixed Assets Total Assets $ 8,000 21,000 86,000 147,000 $262,000 Manny Corp. Balance Sheet 12-31-06 (000's omitted) Accounts Payable $ 33,000 Long-Term Debt 141,000 Capital Stock 82,000 Retained Earnings 6,000 Total Equities $262,000 Manny Corp. Income Statement For Period Ending 12-31-06 (000's omitted) Sales Cost of Goods Sold Gross Profit Selling, General, & Admin. Net Income (Loss) $110,000 80,000 $ 30,000 31,000 ($ 1,000)