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13. Analytical Procedure (Book A Ch. 8). General Analytical Procedures Case 8-20. Analytical Procedures. At the beginning of the annual audit of P.Bv. wholesale distributor

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13. Analytical Procedure (Book A Ch. 8). General Analytical Procedures Case 8-20. Analytical Procedures. At the beginning of the annual audit of P.Bv. wholesale distributor of Valkenbung, the Netherlands, L.H. R, was given a copy of P's financial statements as prepared by me company's accountant. On reviewing these statements, Heijn noted the following abnormal conditions: 1. The accounts receivable outstanding at the yearend represent an unusually high number of average days' credit sale. 2. The inventories on hand at the year end represent an usually high proportion of the current assets 3. The working capital ratio of the company is almost twice that of the previous year. 4. The percentage of gross profit on net sales is considerable in excess of that of previous year. 5. The rate of turnover of inventory is usually low in comparison with previous year. Required: Taking at the above conditions together, what irregularities might Heijn suspect regarding sales and inventories?. Uniform Evaluation Report (Toronto CPA, Canada)

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