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.

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Definitions:

Winning

In a business context, achieving a competitive advantage or success in a specific market or area.

Intrinsic Fairness

An ethical principle referring to the inherent or natural equity or justice in processes, interactions, or distributions among individuals or groups.

Rational Behavior

The assumption that individuals make decisions based on seeking the most benefit while minimizing costs, according to their preferences and information.

Economic Models

Simplified representations of complex economic processes, using mathematical techniques and assumptions to understand and predict economic behavior and outcomes.