PAC 8.1 Auditing: Interpret Descriptive and Diagnostic Analytics Data Auditing You are on the external audit team auditing Orthos financial statements as of and for the year ended December 31, 2025: Note that the amounts presented in the comparative income statement for 2024 are audited, whereas the amounts presented for 2025 are unaudited. For the year ended December 31, 2024, your audit firm issued an unqualified opinion on the financial statements and noted that the companys internal controls over financial reporting were appropriately designed and operating effectively. You have been asked to consider risks of material misstatement related to net sales. Specifically, your audit senior has asked you to interpret the descriptive analytics provided by your firms data analysis team. The Tableau output is provided. Sales Frequency Distribution Prod ProductDescription TR TransDate Distinct Count of TR Subtotal TR Subtotal 2024 2025 2024 2025 Ceramic-on-Ceramic Knee 4,378 4,196 113,844,112 116,040,741 Metal and Crosslinked Polyethylene Knee 7,217 7,208 145,197,885 153,572,138 Metal and Plastic Knee 9,567 9,714 103,546,449 107,545,175 Metal-on-Metal Knee (Cobalt chrome) 20,457 20,331 185,198,302 198,397,781 Metal-on-Metal Knee (Stainless steel) 4,153 4,306 106,320,616 116,722,920 Metal-on-Metal Knee (Titanium) 16,526 16,760 199,398,247 220,828,360 Grand Total 60,102 60,424 853,505,611 913,107,114 Consider the validity of the Tableau output provided by your information technology team. Is the sales frequency distribution table analysis valid and reliable? Why or why not? Compare the sales mix from 2025 to 2024. How does sales mix contribute to consideration of the risk of material misstatement? During inquiry with the vice president of sales, your engagement team learned that the largest customer purchases only metal-on-metal knee products, and that these purchases account for approximately 35% of all sales of these products. This customer has recently requested significant modifications to their sales order contract and credit terms because of possible bankruptcy concerns. How might this information, combined with the sales frequency distribution table, contribute to the risk of material misstatement? The technology team has provided a scatterplot of sales for the metal-on-metal knee (cobalt chrome) product for the month of October. The technology team has identified certain points on the diagram. Explain whether each of the identified points on the diagram would need further investigation, or if they should be included in normal substantive testing for sales. A scatterplot is titled, Sales Transaction Total. The vertical axis ranges from negative $80,000 (shown in parentheses) to $80,000, in increments of $20,000. The horizontal axis labeled, State, ranges from September 27 to November 06, in intervals of 5 days. Major portion of the scatterplot lies between (October 1, $19,000) and (October 31, $58,000). The scatterplot at (October 07, negative $30,000 (shown in parentheses), is numbered 1. The scatterplot at (October 10, $70,000, is numbered 3. The scatterplot at (October 29, $19,000), is numbered 1. All values are approximate. Use the Ortho, Inc data sets to create additional descriptive analytics. Consider creating a cross tabulation analysis of sales by product description and/or sales by site code. These descriptive statistics provide insight into the companys net sales for the year under audit. Describe your analysis, and interpret your results