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Out of 10 customers- Customer A purchases the most products from a company but is not...

Out of 10 customers- Customer A purchases the most products from a company but is not the most profitable for the company (Customer B is the most profitable out of the 10 customers), what concerns might you have from an audit perspective?

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Expert Solution

Even if consumer A is not able to generate enough profit for the company, it is still having the most of the the product of the company purchased as sales.

As an auditor I would be highly sceptical towards such transaction and I would try to get into the authenticity of this transaction because business is highly meant for making profits and it should not continue the highest transaction with a person who is not generating the highest profit with the company, so I would be sceptical in my approach and I would try to find the relationship between the business and consumer A.

I would try to find that if customer A is a related party to the business or it is an independent party to the business, and I will also look for the past transaction and also any relationship as a managerial post or any promotion post held by customer A into company.

I would also look for the relationship chain of of the whole company to find out if any person is related to customer A and holding an important position in the company or not, to establish whether he is a related party or an independent party.

jeff jeffy answered 1 year ago
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