As a Result of Analytical Procedures Conducted During the Planning

question 18

Multiple Choice

As a result of analytical procedures conducted during the planning phase, the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year. The auditor should:

• A)Express an opinion that is qualified due to the inability of the company to continue as a going concern.
• B)Evaluate management's performance in causing this decline.
• C)Require footnote disclosure.
• D)Consider the possibility of an error in the financial statements.

---

Definitions:

Personal ties

Relationships between individuals that are based on emotional bonds, shared experiences, or mutual interests.

Divorce

The legal dissolution of a marriage by a court or other competent body, officially ending the relationship.

Divorce rates

The statistical measure of the number of divorces occurring within a defined population during a given time period.

Stepchildren

Children of one's spouse from a previous relationship.