Assume that you are working on the audit of Vertical Corp. This client is a U.S. communications company that provides wireless and landline local, long distance, and Internet services. You would like to perform substantive analytical procedures for the revenue account.

Required
Part A. In your groups, discuss (a) the pros and cons of using alternative types of analytical procedures and provide an example for each type, (b) approaches to disaggregating the data when developing an expectation, (c) how your decision to use substantive analytical procedures might be influenced if there was a heightened risk of fraud at the client, and (d) the possible benefits of performing substantive analytical procedures.

Part B. Assume that you decide to do a reasonableness test or regression analysis to develop an expectation of Internet Access Revenue. Where would you obtain data to develop your expectation?

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Part a aThe pros of using analytical procedures include They can provide insights that may not be readily apparent from the financial statements themselves They can help to identify potential areas of ... View the full answer