CPA · Question 28 · Area III: Performing Procedures
An auditor is auditing the financial statements of an issuer. The auditor is using Audit Data Analytics (ADA) to test the revenue account. The auditor analyzes 100% of the sales transactions for the year and identifies 50 transactions that fall outside the auditor's expected range (notable items). What is the auditor's NEXT step?
Answer options:
Immediately conclude that the revenue account is materially misstated.
Evaluate the notable items to determine if they represent a risk of material misstatement, grouping them by common characteristics if possible.
Ignore the notable items if they are individually immaterial.
Switch to a traditional sampling approach.
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