Consider the following analytical procedures performed as of the end of the audit:

Suppose the working papers include a summary document indicating that - Sales have increased because of an increase in sales price.

- Ten new employees were added to the production line.

- A new storage facility was added to property, plant, and equipment.

- Loan of \(\$ 3\) million was taken out during the year.

a. What evidence would you expect to find in the detailed working papers to support these conclusions?

b. Do you have any concerns regarding the ability of this organization to continue as a going concern based on this analysis?

c. Are there any other issues that you believe need additional attention based on these overall analytical procedures?

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Red Hawk Apparel Final Analytical Procedures For year ended 12/31/08 12/31/08 12/31/07 % Change Cash Accounts Receivable, net Inventory Property, Plant, Equipment, net Payables Long-Term Debt Stockholders' Equity $ 5,500 $ 5,000 10% 12,000 8,000 50% 14,000 10,000 40% 21,000 20,000 5% $ 5,500 $ 6,000 (8%) 22,000 20,000 10% 25,000 10/31/08 17,000 47% 10/31/07 Sales $ 50,000 $ 45,000 11% Cost of Goods Sold (28,000) (25,000) 12% Gross Margin 22,000 20,000 Bad Debt Expense 5,000 4,500 11% Operating Expenses 5,000 5,000 0% Tax Expense 2,200 2,000 10% Net Income 9,800 8,500