Which of the following statements is TRUE regarding an analytical review of financial statements in...

Option D is correct because analytical review can reveal inventory theft when cost of goods sold changes disproportionately compared with sales. If inventory is stolen, the organization may experience higher inventory shrinkage or cost of goods sold without a corresponding increase in sales revenue. The ACFE material identifies analytical review, physical inventory counts, perpetual inventory records, and shipping-document review as methods for detecting inventory schemes. Option A is incorrect because analytical review can help identify unusual relationships or trends. Option B is weak because unchanged sales and unchanged cost of goods sold do not indicate a loss pattern. Option C is too absolute; changes in cost of goods sold must be evaluated in relation to sales, business conditions, and other explanations.

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