Pick two account to analyze (Ex: Account receivable, Cash, Account payable, Sales , cost of goods sold.) analysis. (4 years)

1. Set level of materiality (Ex : change of 25% or higher )
2. Make a conclusion for each account (1. point )
o The auditor should pay more attention to the sales account. It decreased by 45%
2017 and by 66% in 2018. Interestingly, the percentage of change dropped in
2019. However, the sales changes did not exceed our threshold limit of 25%,
which means the changes is within the acceptable range.
o The changes in the COGS were not significant. It was relatively the same during
the last three years.
3. Make a conclusion for Both Accounts (.5 point)
o The COGS remained relatively the same despite the slight increase in the sale.
The auditor must consider the cause of this inconsistency to ensure that no vicious
sales were recoded or that no costs were missed
Formula:
(THE YEAR /THE BASE YEAR)*100 = CHANGE RELATIVE TO BASE YEAR

Solve the above question as in the example below
The table below is a solution to a different question

  

Transcribed Image Text:

BALANCE SHEET STATEMENT OF INCOME Net Premium Earned Reinsurance Commission St. of Ins. Operation and Surplus: Gross Premium Written STATEMENT OF INCOME ANNUALLY Other Underwriting Income Total Revenues Investment Income and Other Income Gross Claim Paid Net Claim Incurred Policy Acquisition Costs Excess of Loss Expenses Other Expenses Total Costs and Expenses Net Surplus after Sh. Appropriation Accum. Ph. Surplus End of Period St. of Sh Operations: Investment and Management Fee Income Other Income Sh. Appropriation From Net Surplus General and Administrative Expenses Net Income (Loss) for the Period St. of Changes in Retained Earning: CASH FLOW 2020-12-31 781,568 738,883 15,052 4,996 27,669 786,600 600,381 581,438 78,930 18,890 111,574 790,832 30,902 4,232 3,997 22,673 2019-12-31 XBRL 835,236 681,638 17,786 2,694 16,850 718,968 558,429 506,770 71,602 17,278 113,319 708,969 1,000 12,005 8,999 2,639 18,365 QUARTERLY 2018-12-31 DETAILED REPORTS AND STATEMENTS 729,076 611,858 15,736 5,835 9,364 642,793 606,774 404,985 77,336 20,508 126,406 629,235 1,356 6,463 12,202 3,035 15,630 2017-12-31 726,978 834,595 98,008 7,847 6,950 947,400 975,630 746,759 98,018 19,745 102,700 967,222 -36 -19,822 -2,830 -17,028 BALANCE SHEET STATEMENT OF INCOME Net Premium Earned Reinsurance Commission St. of Ins. Operation and Surplus: Gross Premium Written STATEMENT OF INCOME ANNUALLY Other Underwriting Income Total Revenues Investment Income and Other Income Gross Claim Paid Net Claim Incurred Policy Acquisition Costs Excess of Loss Expenses Other Expenses Total Costs and Expenses Net Surplus after Sh. Appropriation Accum. Ph. Surplus End of Period St. of Sh Operations: Investment and Management Fee Income Other Income Sh. Appropriation From Net Surplus General and Administrative Expenses Net Income (Loss) for the Period St. of Changes in Retained Earning: CASH FLOW 2020-12-31 781,568 738,883 15,052 4,996 27,669 786,600 600,381 581,438 78,930 18,890 111,574 790,832 30,902 4,232 3,997 22,673 2019-12-31 XBRL 835,236 681,638 17,786 2,694 16,850 718,968 558,429 506,770 71,602 17,278 113,319 708,969 1,000 12,005 8,999 2,639 18,365 QUARTERLY 2018-12-31 DETAILED REPORTS AND STATEMENTS 729,076 611,858 15,736 5,835 9,364 642,793 606,774 404,985 77,336 20,508 126,406 629,235 1,356 6,463 12,202 3,035 15,630 2017-12-31 726,978 834,595 98,008 7,847 6,950 947,400 975,630 746,759 98,018 19,745 102,700 967,222 -36 -19,822 -2,830 -17,028

Answer rating: 100% (QA)

Based on the information provided we need to calculate the relative changes of the Sales and Cost of Goods Sold COGS accounts over a period of four ye... View the full answer