In the Planning Phase,Denis Conducted an Analytical Procedure to Compare

Multiple Choice

In the planning phase,Denis conducted an analytical procedure to compare the allowance for doubtful accounts balance to the accounts receivable balance.In the prior years,the allowance for the doubtful accounts/accounts receivable ratio was between 2.5% to 3.5%.This year,the number is 1.25%.What should Denis do?

A) Change the assessed inherent risk
B) Conduct additional testing to justify the lower bad debt.
C) Advise management that they should increase the allowance for doubtful accounts provision.
D) Document this difference and continue with audit work to see if this is pervasive bias of management.