You have been assigned to audit the factory supplies expense account for a medium-sized manufacturing firm. Here is the relevant data for the past three years:

Required

a. Briefly explain how analytical review techniques might be used during the audit of this expense account. Identify potential variables (besides sales) that should be considered in modeling (estimating) the supplies expense account balance.

b. The auditor wishes to test existence, valuation, and classification of the supplies expense account balance. Describe one audit procedure (besides analytical review) that would test the three assertions.

2007 (Unaudited) 2006 2005 Sales Supplies Expense Net Income Factory Assets $22,808 784 1,001 16,500 $21,900 925 985 14,500 $20,500 815 915 14,800