In reviewing the interim financial statements of Lady Day Enterprises, a publicly traded electronic components wholesaler, your audit firm (which also conducts the annual audit) performs the following procedures:

- Analytical procedures on the overall reasonableness of most of the account balances on the balance sheet.

- Client inquiries on the methods used to obtain estimates of bad debts, inventory write-downs, and so on.

- Analytical procedures on the largest expense categories (i.e., cost of goods sold, selling expenses).

- Substantive tests on transactions in the inventory account balance where fraud is expected.

Discuss any deficiencies in the procedures and any special disclosures in your interim review report that will differ from the annual audit report. Assume you found that some inventory is not carried at the lower of cost or market.