Productivity statistics are provided quarterly to a company's board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the workpapers and then discarded the scratch paper and report copies. The auditor's note stated.
"The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate."
In this situation:
- Four quarters is not a large enough sample on which to base a conclusion.
- The auditor's workpapers are not sufficient to facilitate an efficient review of the auditor's work.
- The auditor should have included the scratch paper in the workpapers.
- The auditor should have considered whether the information in the board report was compiled efficiently.