As you complete these questions, consider the following features of and trends in the pharmaceutical industry and for PhamaCorp specifically:
- After a long period of industry dominance by companies in the United States, the United Kingdom, and Europe, these companies are facing increasing competition from companies domiciled in emerging economics, such as Brazil, India, and China.
- There exists significant uncertainty in the market because of recent regulation covering health-care and government payouts for certain procedures and related pharmaceuticals.
- Health-care policy makers and the government are increasingly focusing on prevention regimes rather than treatment regimes, thereby leading no shifts in the demand for various pharmaceuticals.
- The global pharmaceutical market is anticipated to grow by 5% to 7% in 2016 compared with a 4% to 5% growth rate in 2015, according to a leading industry analyst publication.
- Beginning in 2014, PharmaCorp initiated and executed a significant company-wide cost reduction initiative aimed at improving manufacturing efficiency, cutting back on research and development expenses, and eliminating unnecessary corporate overhead.
- PhamaCorp's policies for extending credit to customers have remained stable over the last three years. PhamaCorps's credit-granting policies are considered stringent within the industry, and analyses have sometimes criticized (phe binh) the company for this, contending that such policies have hindered (can tro) the company's revenue growth relative to industry peers.
- Two of PharmaCorp's popular pharmaceuticals, Selebrax and Vyvox, came off patent during the fourth quarter of FYE 2015. These pharmaceuticals now face competition in the generic drug portion of the overall industry market.
1) Develop Expectations. Complete of planning analytical procedures by developing expectations for relevant accounts in the revenue cycle and for the ratios from Part (a). Develop expectations by considering both historical trends of PharmaCorp, and also by considering features of and historical trends in the industry.
2) Complete of planning analytical procedures by describing accounts or relationships that you would investigate further through substantive audit procedures. Explain your reasoning.
3) Describe what information should be included in the auditor’s workpapers.
4) Define and Identify Significant unexpected differences. Explain your reasoning.