An auditor compared the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable. What type of audit procedure was performed?
A) Test of transactions.
B) Analytical procedures.
C) Test of controls.
D) Test of details.

Question

Quizplus · Accepted Answer

The auditor performed analytical procedures, which involve comparing financial information to identify fluctuations or inconsistencies that may indicate potential misstatements or errors. By comparing the current-year gross margin with the prior-year gross margin, the auditor is able to assess whether the cost of sales is reasonable and identify any unusual trends or fluctuations that may warrant further investigation.

An Auditor Compared the Current-Year Gross Margin with the Prior-Year