Canterlot Chartered Accountants is a successful mid-tier accounting firm with a large range of clients across Australia. During the 2020 year, Canterlot gained a new client, Cloudsdale Medical Group (CMG), which owns 100 per cent of the following entities:

• Everfree Forest Hospital, a private hospital group

• Calendula Care Pty Ltd, a private nursing home

• Tempo Cancer Treatment Limited (TCTL), a private oncology clinic that specialises in the treatment of cancer.

Year-end for all CMG entities is 30 June.

You are performing the audit field work for the 2020 year for Everfree Forest Hospital. The field work must be completed in time for the audit report to be signed on 21 August 2020. You have been asked to circulate the debtors’ confirmations. Everfree Forest Hospital’s trade receivables arise from the use of hospital facilities (including the provision of nurses, anaesthetists, operating theatres and supplies) by medical practitioners in private practice. The trade receivables balance was $4 105 967 as at 30 June 2020 and was considered material.

The hospital’s payment terms are 14 days from the date of the invoice. Sixty per cent of the balance is represented by invoices outstanding from five different medical practitioners. The remaining 40 per cent is made up of numerous smaller amounts, most of which have been outstanding for more than 60 days. Any allowance for doubtful debts is taken directly against the trade receivables account and not shown separately.

Assume that you are completing field work on payables for Everfree Forest. The payables relate to purchases of medical and catering supplies, employee related provisions, other accruals, and loans from banks and directors. Each account is individually material.

(a) Would you use payables’ confirmations? Explain.

(b) Provide a list of substantive procedures that would address the completeness and valuation assertions for each account.