Discuss Three Examples of Analytical Procedures an Auditor Might Perform

question 118

Essay

Discuss three examples of analytical procedures an auditor might perform while auditing the sales and collection cycle.Also discuss the potential misstatement(s)that may be revealed by each analytical procedure.
Note: students could also be asked to separately discuss ratios for planning and ratios as substantive tests.

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Definitions:

Bullish Position

An investment strategy where an investor believes that a particular asset's price will rise.

Performance Evaluation

The process of examining how well investments or portfolios have done over a period, comparing their returns against benchmarks or objectives.

Survivorship Bias

The analytical error of focusing only on entities that have "survived" a selection process, ignoring those that have failed.

Infrequently-Traded Assets

Assets that do not trade on a regular basis on the secondary market, making their valuation and liquidity different from frequently traded assets.