Audit of Expenses and Payables. Elias Staresina is the auditor of the Perun Company of Ljubljana, Croatia. Staresina is considering the audit work to be performed in the accounts payable area for the current year’s engagement.

The prior year’s working papers show that confirmation requests were mailed to 100 of Perun’s 1,000 suppliers. The selected suppliers were based on Staresina’s sample that was designed to select accounts with large Croatian Kuna (Kuna) balances. A substantial number of hours were spent by Perun and Staresina resolving relatively minor differences between the confirmation replies and Perun’s accounting records. Alternative audit procedures were used for those suppliers who did not respond to the confirmation requests.

Required ,

A. Identify the accounts payable audit objectives that Staresina must consider in determining the audit procedures to be followed.

B. Identify situations when Staresina should use accounts payable confirmations and discuss whether Staresina is required to use them.

C. Discuss why the use of large Kuna balances as the basis for selecting accounts payable for confirmation might not be the most efficient approach and indicate what more efficient procedures could be followed when selecting accounts payable for confirmation.