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You have been assigned to the confirmation of aged accounts receivable for the Blank Paper Company audit. Two of them are credit balances, one is a zero balance, two of the other three have a fairly small balance, and the remaining balance is highly material. The reason he gives is that he feels the confirmations will upset these customers because "they are kind of hard to get along with." He does not want the credit balances confirmed because it may encourage the customer to ask for a refund.

In addition, the controller asks you to send an additional 20 confirmations to customers he has listed for you. He does this as a means of credit collection for "those stupid idiots who won't know the difference between a CPA and a credit collection agency."

Required

a. Is it acceptable for the controller to review the list of accounts you intend to confirm? Discuss.
b. Discuss the appropriateness of sending the 20 additional confirmations to the customers.
c. What additional procedures should be performed if the auditor agrees with the client's request not to send confirmations to the six customers.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9965798

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