Analytical procedures are useful at the planning stage for risk assessment. Using analytical procedures and the following extracts from the draft financial statements of an audit client, identify THREE areas which you believe require further investigation, explaining your reasons. 2020(draft) 2019(audited) £ £ Sales 7,765,000 5,974,500 Cost of Sales 5,823,750 4,779,600 Gross Profit 1,941,250 1,194,900 Depreciation 269,800 257,900 Salaries 680,000 645,000 Repairs and maintenance costs 328,000 124,000 Motor expenses 72,400 53,000 Bank loan interest 82,000 64,000 Non-current assets 3,400,000 2,786,000 Inventories 612,500 432,000 Trade receivables 340,000 232,700 Cash at bank - 673,000 Trade payables 265,000 254,000 Bank overdraft 214,000 -
Analytical procedures are useful at the planning stage for risk assessment. Using analytical procedures and the following extracts from the draft financial statements of an audit client, identify THREE areas which you believe require further investigation, explaining your reasons.
2020(draft) 2019(audited)
£ £
Sales 7,765,000 5,974,500
Cost of Sales 5,823,750 4,779,600
Gross Profit 1,941,250 1,194,900
Salaries 680,000 645,000
Repairs and maintenance costs 328,000 124,000
Motor expenses 72,400 53,000
Bank loan interest 82,000 64,000
Non-current assets 3,400,000 2,786,000
Inventories 612,500 432,000
Trade receivables 340,000 232,700
Cash at bank - 673,000
Trade payables 265,000 254,000
Bank overdraft 214,000 -
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