5b Debtor List:

1. Audit Testing (13 marks)

1. Test of controls using analytics

The company policy requires the credit manager, John Williams, to perform credit history checks on all new customers. You obtained a list of new customers processed during the 2021 financial year to identify whether the internal control is effective (see Excel spreadsheet 5a new customer list). Assume the tolerable deviation rate is 6% for the internal control to be considered effective.

1) Identify the relevant audit objective(s) and account(s);

2) Calculate the deviation rate for the test of control,

3) Discuss whether the internal control is effective or not, and evaluate the impact on the substantive procedures.

2. Dollar unit sampling

The auditors decided to use dollar unit sampling to identify the debtors to send confirmation letters to. Please find the list of debtors (see 5b debtor list above), sort the debtor list ascending by customer name, apply dollar unit sampling, and complete.

3. Evaluate results (2 marks)

Working Paper Schedule D-3

Customer Name	Account Receivable Balance (30 June 2021)	Amount Confirmed by Customer	Follow-up Procedure
Tasty Ltd	$908,000	Confirmation reply not received from customer
Freshy Food Ltd	$732,000	$700,000

Working Paper Schedule D-4 lists part of the confirmation result. One customer, Tasty Ltd did not respond to auditors positive confirmation request, whereas another customer, Freshy Food Ltds confirmed balance differs from the recorded balance. Design follow-up procedures for the two cases and complete the follow-up procedures in Working Paper Schedule D-4.

A B 1 Customer Name Account Receivable Balance (30 June 2021) 2 ABN 12014521 Ltd $290,000 3 ACN 2939485 Ltd $ 74,000 4 Apatito $170,000 5 Atlantic Fish Co $69,000 6 Avid Apron $150,000 7 Barley Mash $8,000 8 Blue Monkeys $5,000 9 Califomia Shack $45,000 10 Carthay Circle Restauran $100,000 11 CFK Ltd $270,000 12 Chefvisor $2,000 13 Chez Panisse $5,000 14 Chilli Thyme Food Ltd $90,000 15 Cooking School $9,000 16 Courmet Lites Ltd $3,000 17 Farmhouse Inn Restaurar $2,000 18 Fish and Co. $5,000 19 Flavour Rocket Inc. $90,000 20 Flavoumess Ltd $292,000 21 Flavure Inc $ 124,000 22 Food Trade (Shanghai) I $10,000 23 Foodema Ltd $1,000 24 Freshy Food Ltd $732,000 25 Green Leaf $5,000 26 Hillston Fancy Food Ltd $8,000 27 Hog Island Oyster Co. $6,000 28 Japanese Meet and Co. $300,000 29 Little Sheep $4,000 30 Mad Shark Ltd $2,000 31 Manresa $3,000 32 Mario's Restaurant $58,000 33 Mr Chef $46,000 34 Nutreq.com $270,000 35 Nutrith Ltd $30,000 36 Rainbow Food Inc. $9,000 37 Red and Green Co. $156,000 38 Red Roos Restaurant $145,000 39 Rice Comer $108,000 40 Saltie Girl $128,000 41 Sam's Chowder House $5,000 42 Taffy Tap $400,000 43 Tartine Manufactory $180,000 44 Taste Crave $3,000 45 TastePick Inc. $36,000 46 Tasty Ltd $908,000 47 The Capital Grille $345,000 48 The Gourmet Collection $2,000 49 The Kitchen $5,000 50 The Pink Door $6,000 51 Theo's Cozy Comer Res $5,000 52 Tofuda Pty Ltd $128,000 53 Tropical Breeze Hotel $54,000 54 Turf N Things $ 550,000 55 Wine Champion Pty Ltd $500,000 56 YumTrip $98,000 57 Zoftig Eatery $153.000 A B 1 Customer Name Account Receivable Balance (30 June 2021) 2 ABN 12014521 Ltd $290,000 3 ACN 2939485 Ltd $ 74,000 4 Apatito $170,000 5 Atlantic Fish Co $69,000 6 Avid Apron $150,000 7 Barley Mash $8,000 8 Blue Monkeys $5,000 9 Califomia Shack $45,000 10 Carthay Circle Restauran $100,000 11 CFK Ltd $270,000 12 Chefvisor $2,000 13 Chez Panisse $5,000 14 Chilli Thyme Food Ltd $90,000 15 Cooking School $9,000 16 Courmet Lites Ltd $3,000 17 Farmhouse Inn Restaurar $2,000 18 Fish and Co. $5,000 19 Flavour Rocket Inc. $90,000 20 Flavoumess Ltd $292,000 21 Flavure Inc $ 124,000 22 Food Trade (Shanghai) I $10,000 23 Foodema Ltd $1,000 24 Freshy Food Ltd $732,000 25 Green Leaf $5,000 26 Hillston Fancy Food Ltd $8,000 27 Hog Island Oyster Co. $6,000 28 Japanese Meet and Co. $300,000 29 Little Sheep $4,000 30 Mad Shark Ltd $2,000 31 Manresa $3,000 32 Mario's Restaurant $58,000 33 Mr Chef $46,000 34 Nutreq.com $270,000 35 Nutrith Ltd $30,000 36 Rainbow Food Inc. $9,000 37 Red and Green Co. $156,000 38 Red Roos Restaurant $145,000 39 Rice Comer $108,000 40 Saltie Girl $128,000 41 Sam's Chowder House $5,000 42 Taffy Tap $400,000 43 Tartine Manufactory $180,000 44 Taste Crave $3,000 45 TastePick Inc. $36,000 46 Tasty Ltd $908,000 47 The Capital Grille $345,000 48 The Gourmet Collection $2,000 49 The Kitchen $5,000 50 The Pink Door $6,000 51 Theo's Cozy Comer Res $5,000 52 Tofuda Pty Ltd $128,000 53 Tropical Breeze Hotel $54,000 54 Turf N Things $ 550,000 55 Wine Champion Pty Ltd $500,000 56 YumTrip $98,000 57 Zoftig Eatery $153.000