Reference no: EM132816139

James Jones, CPA, is the auditor of Wycliffe Corporation (WC). Jones is considering the audit work to be performed in the accounts payable area for the current year engagement. After obtaining an understanding of WC's controls, Jones assessed control risk at the maximum.

• Jones decided to confirm supplier balances and mailed confirmation requests to 40 of WC's 1000 suppliers. The selected suppliers were based on Jones's sample that was designed to select accounts with large dollar balances.

Required:

Problem a) Identify three situations when the auditors should use accounts payable confirmations

Problem b) Explain why the use of large dollar balances as the basis for selecting accounts payable for confirmation might not be the most effective approach for the audit of accounts payable.