Why would the audit team compare sales trends on a quarterly or annual basis?
The main reason is to understand and developments in the business and begin to assess the reasonableness of any fluctuations in revenue. This analysis is known as analytical procedures.
The visual below illustrates how the audit team could compare quarterly sales and the type of explanation a CEO could provide for why sales increased (or decreased). If the CEO doesn’t provide a good explanation, then the audit team will need to dig in and understand if there is anything fraudulent going on.
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