Eric and Patricia own the major shares of King Companies, (KCI) . Eric is the chairman of the board of directors and patricia is director as well as CFO. Eric has approached our company Thornson and Danfort, LLP to conduct an annual audit of the KCI for year ended december 31, 2022. The coompany is anticipating applying a loan and a new private equity investor that has acquired a 20% sharre of KCI.

There are around 20 full time staff within KCI. These workers are employed within store management, sales, parts delivery and accounting. About 40% of KCI business is retail walk in business while the remaining 60% is the regular business where KCI delivers goods and collects cash for the sale. Eric and patricia are focussing on additing three to six store in the next few years.

Eric ic primarily focussed on growing revenues as it is important to obtain bank financing. Patricia trusts that the company's workers work hard for the company and that they are loyal. The accounting staff do not even take annual vacations, and hardly workers take sick leave. There are only two people who are currently employed under the accounting team. Jonathan , does all activites himself like opening mails, cash receipts and vendor payments, depositing funds received , performing payroll function, etc and Abby owens is fully responsible for the payroll system and posting all entries to accounting system. Jonathan and abby help out each other in busy periods.

You have been asked by your audit manager to consider how the audit firm might audit revenues by using audit data analytics to evaluate 100% of the revenue transactions. Where do you feel that it would be most effective to audit 100% of the transactions using ADA? In addition to the sales information, what other information should you consider in your analysis? Develop a specific audit strategy for how you would screen 100% of the revenues, how you would identify exceptions, and how you might consider what would be acceptable variations from your expectation norm versus unacceptable variations.