During the financial audit of DIGIT.ALL, the Auditor gathered the following relevant financial data on...
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Accounting
During the financial audit of DIGIT.ALL, the Auditor gathered the following relevant financial data on company performance for the past three years.
| 2016 | 2017 | 2018 | 2019 | |
| sales | P220,500.00 | P446,250.00 | P803,250.00 | P1,204,875.00 |
| Cost of sales | 118,125.00 | 196,875.00 | 216,562.50 | 386,564.06 |
| gross margin | - | - | - | - |
After analyzing above data, the Auditor was convinced that there are fraud indicators.
Required:
A.1
(a) Perform a horizontal analysis
(b) Identify potential red flags on possible overstatement of sales. Support your answer with reason/justification why you consider this (these) as red flags
A.2
(a) Perform a vertical analysis
(b) Identify potential red flags on possible understatement of cost of sales. Support your answer with reason/justification why you consider this (these) as red flags
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