You are the auditor of Serata's Wholesale Berhad and you are auditing the financial statements for the year ended 31 October 2016. You have carried out an analytical review on the profit and loss account and are concerned that there has been a significant fall in the gross profit margin, as shown by the following statement (2016 figures are from the draft accounts and 2015 figures are from the audited accounts). You have been asked to determine whether the fall in profit is correct or due to errors in the preparation of the financial statements. The company does not maintain book stock records, and stock quantities were found from a physical stock-take at 31 October 2016. For sales to customers: 1) The sales department receive orders from customers and raise a multi-copy dispatch note when the goods are available. 2) The credit controller authorizes the dispatch note. 3) The dispatch department send the goods to the customer and a copy of the dispatch note is sent to the sales accounting department. 4) The sales accounting department prepare the sales invoice from the dispatch note. Describe THREE possible reasons for the fall in the gross profit margin. Explain the work you will carry out to: Compare the gross profit on actual sales during the year with the gross profit in the financial statements. Indicate any un-invoiced sales or sales at incorrect prices. Indicate any understatement of the value of closing stock. You are the auditor of Serata's Wholesale Berhad and you are auditing the financial statements for the year ended 31 October 2016. You have carried out an analytical review on the profit and loss account and are concerned that there has been a significant fall in the gross profit margin, as shown by the following statement (2016 figures are from the draft accounts and 2015 figures are from the audited accounts). You have been asked to determine whether the fall in profit is correct or due to errors in the preparation of the financial statements. The company does not maintain book stock records, and stock quantities were found from a physical stock-take at 31 October 2016. For sales to customers: 1) The sales department receive orders from customers and raise a multi-copy dispatch note when the goods are available. 2) The credit controller authorizes the dispatch note. 3) The dispatch department send the goods to the customer and a copy of the dispatch note is sent to the sales accounting department. 4) The sales accounting department prepare the sales invoice from the dispatch note. Describe THREE possible reasons for the fall in the gross profit margin. Explain the work you will carry out to: Compare the gross profit on actual sales during the year with the gross profit in the financial statements. Indicate any un-invoiced sales or sales at incorrect prices. Indicate any understatement of the value of closing stock