Saturday, March 16, 2013

Question for auditors- do you all factor in inflation while doing sales analysis

We have one question that we want to hear from our fellow followers and readers of accounting and auditing blogs. As part of audit procedures for most of audit firms, it is compulsory to review and understand the fluctuation of certain accounts, for instance your sales revenue.

We would like to understand from you, do you all factor in inflationary rate while factor in the review of income statement, e.g. sales revenue, operating expenses, etc? To illustrate, your expenses level may stay relatively constant at prior period level. However, given the inflatinonary rate of 5%, should the expenses be higher, assuming volume stay constant??

We would like to hear from you on whether did you factor in the inflationary factor, and how did you address that. Thank you very much.

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