As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.
As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should..
A. Document manamgent intentions with respect to reversing the trend.
B. Evaluate managment's performance in causing the deline
C. Require a footnote disclosure
D. Consider the possibility of an error in the financial statements.
Expert Solution
Step 1
The auditor's duty is to identify the fraud and errors in the financial statement of the company. If the gross profit has decreased from 30% to 15% it would be because of the misstatement presented in the financial statement of the company.
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