An auditor's substantive analytical procedure provides the auditor with an interest expense amount that is significantly higher than the client's recorded interest expense. This finding would most likely lead the auditor to conclude that:

Question

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A higher amount of interest expense than recorded could indicate that the client has not recorded all interest expense paid or accrued. This could be due to a variety of reasons such as missed payments, errors in recording or late payments that have not been recorded yet. It could also indicate that the client has not properly accrued for interest expense at the end of the accounting period. Alternative choices such as those related to long-term debt or bonds payable would not necessarily be indicated by a higher interest expense amount.

An Auditor's Substantive Analytical Procedure Provides the Auditor with an Interest