Examining the relationship of sales and cost of sales

Reference no: EM131073370

Assume that the auditor proposes that sales be audited by examining the relationship of sales and cost of sales to that of the previous two years, as adjusted for an increase in gross domestic product. Further, the auditor has assessed the risk of material misstatement (inherent and control risk) for this account as high. Explain either why, or why not, this would be an effective test of the account balance.

Reference no: EM131073370

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