CAF-8 · Chapter 3 · Question 3 of 10
During analytical procedures at the planning stage, the auditor notes that the client's gross profit margin has unexpectedly increased from 15% to 35% despite a market recession. What assertion related to revenue is at the highest risk?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Occurrence
Explanation
An unexplained spike in gross profit margins during a recession strongly suggests that fake or fictitious sales may have been recorded, threatening the occurrence assertion.
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