When Performing Planning Analytical Procedures for a Client the Auditor

question 18

Multiple Choice

When performing planning analytical procedures for a client the auditor detected that the gross profit percentage had declined by 50% from the previous year to the year currently under audit. The auditor should

• A) investigate the possibility the client may have made an error in their cost of goods sold computation.
• B) assist management in developing greater cost efficiencies in their product line.
• C) prepare a going concern opinion for the client.
• D) advise the client to have extensive disclosure to alleviate investor concerns.

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Definitions:

Harvest Rates

The proportion or quantity of crops or natural resources gathered within a specific period, often influenced by seasonal or environmental conditions.

Replenishment Rates

The speed at which inventory is replaced after being sold or used, crucial for maintaining adequate stock levels and ensuring continuous operation.

Extraction Level

Refers to the volume or rate at which natural resources are being removed from the earth, such as mining for minerals or drilling for oil.

Present Value

The present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return.