Part 2: Analytical Procedures W&S Partners began the planning phase of the Cloud 9 audit. As part of the risk assessment phase for the new audit, the audit team needs to gain an understanding of Cloud 9s structure and its business environment, determine materiality, and assess inherent risk. This will assist the team in developing an audit strategy and designing the nature, extent, and timing of audit procedures. Answer the following questions based on the information presented for Cloud 9 in the appendix to this text and the current and earlier chapters. You should also consider your answers to the case study questions in earlier chapters.

Using analytical procedures and the information provided in the appendix, perform an analysis of Cloud 9s financial position and its business risks. Discuss the ratios indicating a significant or an unexpected fluctuation.

Auditors of W&S Partners in the phase Cloud 9 audit would follow as below the scheme of auditing :

• Formulate audit programme on the basis of knowledge of client's business.
• Determination of the extent of checking on the basis of compliance procedures.
• Carrying out the steps in the procedure on the basis of programme and the extent of substantive checking that may be required.
• Keeping a record of notes and inquires and maintenance of working papers.
• Formulate an option about financial statements and review with reference to accounting standards.
• Issuance of the audit report.