As a result of analytical procedures conducted during the planning phase,the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year.The auditor should
A) Express an opinion that is qualified due to the inability of the client company to continue as a going concern.
B) Evaluate management's performance in causing this decline.
C) Require footnote disclosure.
D) Consider the possibility of an error in the financial statements.

Question

Quizplus · Accepted Answer

The auditor should consider the possibility of an error in the financial statements as the decline in gross profit percentage could be due to miscalculations or misstatements in the financial statements. The auditor should investigate further to determine the cause of the decline and whether any adjustment is necessary to the financial statements.

As a Result of Analytical Procedures Conducted During the Planning