Reference no: EM132918459

You have been assigned to test the accounts receivable for Blank Paper Ltd. As part of your testing you decide to conduct a positive circularization of debtors accounts. Before you mail the confirmation requests the CFO asks to examine your list. After reviewing the list, he states that there are 12 accounts that he does not want you to send. They consist of six overseas accounts, two nil balances, two credit balances, two related company balances and two insignificant balances. The reasons he provides are that the overseas debtors don't understand English very well, the nil balances and insignificant balances are a waste of time, the credit balances may ask for their refunds, and the related parties just agree to what we tell them. In addition, he specifically asks us to send a further 15 requests to accounts he identified as hard to get along with. He does this as a means of credit collection because many of these account holders are stupid and don't know the difference between an auditor and a credit collection agency.

Required:

Question a) Is it acceptable for the CFO to review the list of accounts for circularization?

Question b) Should you comply with his request?

Question c) Is it appropriate to add the additional debtors that the CFO requested to the list?

Question d) If you do comply to his requests what effect does this have on your audit opinion?