2Darlene Babych is conducting the audit of a wholesale electrical goods distributor, Electra Ltd. Electra supplies appliances to hundreds of individual customers in the Toronto area. It maintains detailed accounts receivable records on a computer system. The customer account master file is updated at the end of each business day. Each customer record in the master file contains the following data:

customer account number

customer address

open (unpaid) invoices at the beginning of the month, by invoice number and date

sales during the current month, by invoice number and date

individual cash receipts during the current month

date of last sale

date of last cash receipt

Darlene is planning to confirm selected accounts receivable as at the end of the current month. She will have available a computer file of the data on the accounts receivable master file on the date on which the company sends monthly statements to its customers. Ally has a generalized software package to help her in this task.

Required

Detail how Darlene will be able to use the computer software package and accounts receivable master file to:

a.select specific accounts receivable for confirmation. How should the sample be selected?

b.identify customers at risk of non-payment.What criteria will be used to highlight these customers?

3Accounts receivable is an asset account, and generally the auditor is most concerned with overstatement- existence.

Required

Explain how the control risk of thecompletenessof cash receipts and sales adjustment transactions associated with the control risk over theexistenceof the accounts receivable balance.

Could you please help me solve those two problems?