C. What are analytical procedures? What is their role in an audit? Are they required? Explain. The items below represent an auditor's observed changes in certain financial statement ratios or amounts from the prior year's ratios or amounts. For each observed change, identify the one or two most likely explanations of what might have caused the observed change. 1 - Inventory turnover is up but the balance in the inventory account is down. 2 - Cash inflows from financing activities increased by $500,000, but outstanding stock remained the same. 3 - Gross margin decreased from the prior year, but the gross margin percentage was stable