As an example of difficulties that auditors experience in collecting confirmations of cash balances, consider the Parma at fraud. In that case, the company overstated cash by about $5 billion, which reflected a fictitious amount in a Bank of America account in the Cayman Islands. The Italian segment of the audit firm, Grant Thornton, received a cash confirmation that noted no exceptions to the confirmation the audit firm had sent. Parmalat accomplished the deception, in part, by providing the audit firm with a fictitious bank mailing address. However, it is important to note that SAS 67 "The Confirmation Process" states that "if the combined assessed level of inherent and control risk over the existence of cash is low, the auditor might limit substantive procedures to inspecting client-provided bank statements rather than confirming cash balances" (paragraph 10).

Required
a. SAS 67 allows auditors to use low-cost methods for obtaining substantive evidence regarding the existence and valuation of cash. If those methods are used, what analytical procedures could provide a supplemental low-cost source of evidence?
b. What role does the concept of materiality play in the substantive testing of cash balances?
c. How may the Internet and associated electronic confirmation processes help to avoid fraud associated with cash confirmations?
d. What are two or three key factors the auditor might consider that could have indicated that the cash account was a high risk account for this client and would require more skeptical audit work?