Analytical review can be an extremely powerful tool in identifying potential problem areas in an audit. Analytical

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Analytical review can be an extremely powerful tool in identifying potential problem areas in an audit. Analytical review can consist of trend and ratio analysis and can be performed by comparisons within the same company or comparisons across the industry. The following information shows the past two periods of results for a company and a comparison with industry data for the same period:

Analytical review can be an extremely powerful tool in identifying

Required
a. What are the advantages and limitations of comparing company data with industry data during the planning portion of an audit?
b. From the preceding data, identify potential risk areas and explain why they represent potential risk. Briefly indicate how the risk analysis should affect the planning of the audit engagement.
c. Identify any of the above data that should cause the auditor to increase the level of professional skepticism.

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Auditing A Business Risk Approach

ISBN: 978-0538476232

8th edition

Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg

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