4 answers

An auditor is auditing the financial statements of a privately owned local hotel. The hotel has 200 guest rooms and in the last year, it generated $12.8 million in revenues. The auditor assessed the system of internal controls as effective and therefore decided to perform an ADA. The auditor has decided to perform a substantive analytical ADA using the average nightly and vacancy rates to develop an expected revenue amount for the year and by month. This will be compared with the actual revenues. Which of the following accurately describe the regression analysis the auditor will perform? (Several choices may be correct.) The assertion of occurrence will be tested The dependent variable is the average nightly vacancy rates The independent variable is the average nightly vacancy rates Professional judgement will be required when determining what an acceptable difference is between the calculated and the actual amounts Actual revenues will be calculated and compared to the general ledger amounts The auditor can identify months where revenues are over expected amounts to address completeness The dependent variable is the expected revenues