To better monitor the performance of operating management, executive management has requested that the internal auditors examine interim financial statements, which are prepared for internal use only. although interim financial statements have been prepared for several years, this will be the first time that the internal auditors have been involved. the primary reason for this request was that executive management was surprised at the lower-than-anticipated net income eventually reflected in last year? s audited financial statements. earnings had been artificially manipulated on quarterly financial statements. in their work on this year? s interim financial statements, internal auditors are likely to focus on which of the following?
whether there have been changes in accounting principles that materially affect the financial statements.
whether payables have been accrued properly at the end of the interim period.
whether accounting estimates are reasonable, given past actual results.
the timing of revenue recognition and the valuation of inventories.