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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.


Definitions:

Producer Surplus

The gap between the minimum amount producers are willing to accept for providing a good or service and the actual amount they end up receiving.

Producer Surplus

The additional income a producer receives for selling a good or service above its production cost.

Tax

A tax is a compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.

Consumer Surplus

The discrepancy between the amount consumers are prepared to spend on a product or service and the actual price they pay.

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