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You have been tasked with auditing advertising expense during the audit of your client's 12/31/2018 financial statements. You have planned to audit this account using
You have been tasked with auditing advertising expense during the audit of your client's 12/31/2018 financial statements. You have planned to audit this account using a substantive analytical procedure. The prior year's audited balance was $240,000. Per the prior year audit working papers, this was composed of 80 print advertising spots with magazinesewspapers at an average cost of $2,400 per spot and 1,000 online advertising spots at $48 per spot. Industry trends show that competitors have cut the frequency of print advertising in half, this year but have doubled the frequency of online advertising. Further, relative to the prior year, the price for print advertising has increased 5 percent per spot while the price for online advertising has decreased 8 percent per spot. Your client's management reported (unaudited) 2018 advertising expense of $200,000. Follow the steps of the substantive analytical procedure process discussed in class and practiced throughout Project 3 to conclude as to whether your client's 2018 advertising expense is fairly stated. Justify your conclusion. The tolerable difference for this procedure is 5% of the current year account balance
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