Assume that you are completing field work on payables for Shady Oaks. 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.

Chan and Partners Chartered Accountants is a successful mid-tier accounting firm with a large range of clients across Australia. During the 2017 year, Fellowes and Associates gained a new client, Medical Services Holdings Group (MSHG), which owns 100 per cent of the following entities:

• Shady Oaks Hospital, a private hospital group

• Gardens Nursing Home Pty Ltd, a private nursing home

• Total Cancer Specialists Limited (TCSL), a private oncology clinic that specialises in the treatment of cancer. Year-end for all MSHG entities is 30 June. You are performing the audit field work for the 2017 year for Shady Oaks Hospital. The field work must be completed in time for the audit report to be signed on 21 August 2017. You have been asked to circulate the debtors’ confirmations. Shady Oaks 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 $3 974 569 as at 30 June 2017 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.