During the financial audit of NUMBER ALL CO, the Internal Auditor gathered the following relevant financial data on company performance for the past three years.

	2010	2011	2012	2013
Sales	220,500	446,250	803,250	1,204,875
Cost of Sales	118,125	196,875	216,562.50	386,564.06
Gross Margin	-	-	-	-

After analyzing the above data, the Internal Auditor was convinced that there are fraud indicators.

Required:

A.1

(a) Perform a horizontal analysis

(b) Identify potential red flags on possible overstatement of sales. Support your answer with reason/justification why you consider this (these) as red flags

A.2

(a) Perform a vertical analysis

(b) Identify potential red flags on a possible understatement of cost of sales. Support your answer with reason/justification why you consider this (these) as red flags