lecture_example_-_Jones_Drugs

lecture_example_-_Jones_Drugs - Topic 5 lecture example

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lecture example - Jones Drugs AUDITING TOPIC 5 AUDIT EVIDENCE LECTURE EXAMPLE JONES DRUGS LTD For the data used in this example, see question 6.33. Comparing gross margin percentage for Jones Drug Ltd across 4 years o Shows % profit margin is falling o 2 possible explanations given by client Drug industry has fallen Pharmacy items (compared to non-drug items sold) are more profitable, but sales in this section have declined. 1. Evaluate the explanation given by Adams show calculations Discussion with client = inquiries of client ASA 500.35 Not very reliable, need to design substantive tests ASA500.37 INQUIRY ALONE DOES NOT DETECT MATERIAL MISSTATEMENTS NOR TEST CONTROLS Client response- 1. Industry decline 2. Decline in total pharmacy sales 3. Pharmacy products more profitable 4. Competition from discount chemists Analytical procedures can test what the client is saying. Analytical procedures ASA520 The client says drug industry has fallen.
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lecture_example_-_Jones_Drugs - Topic 5 lecture example

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