Reference no: EM133109502

Question - Taylor is auditing the accounts receivable of the Bakawali Company. The value is recorded for the account receivable as at 31 December 2021 is RM500,000. Of the 250 accounts receivable, Taylor has selected several accounts for verification. While selecting an account for confirmation, Taylor selected the 10 largest accounts amounting to RM25,000 and above as well as 15 accounts others are selected irregularly (haphazard). In the audit file, Taylor stated that he did not send a confirmation for an account worth less than RM100 because the amount is small. Taylor also decided not to send a letter of confirmation to the debtor consisting of a government agency.

Required -

a) Explain THREE (3) weaknesses of the sampling method made by Taylor.

b) Describe TWO (2) sampling methods that Taylor can use as an alternative more accurate sampling methods.

c) Discuss TWO (2) qualitative factors that Taylor should consider in determine the validity of the amount of accounts receivable created.