An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of

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Analytical procedures in the planning phase of the audit involve comparing financial information, such as gross profit, from prior periods and industry benchmarks to identify any unexpected fluctuations or significant changes in trends. If an abnormal fluctuation in gross profit is detected, it may indicate potential issues with sales and inventory, which would require extended audit procedures. Tests of details of balances and specialized audit programs are typically performed in the execution phase of the audit, while procedures to obtain an understanding of internal controls are performed in the planning and execution phases.

An Abnormal Fluctuation in Gross Profit That Might Suggest the Need