As a senior auditor at CPA LLP, you are beginning your first audit of Burnaby Ltd. for the fiscal year ended December 31, 2021. The engagement team consists of you, the engagement partner, and three junior auditors. Burnaby Ltd. is a retail firm that is publicly listed in the TSX (Toronto Stock Exchange). The company was previously audited by another public accounting firm. During the audit, the following scenarios are encountered. Please respond to the scenario below and summarize your response in a report.

When audit accounts receivable, following your instruction, a junior auditor sent 30 positive confirmation requests to a random sample of customers as the substantive procedure. The recorded accounts receivable total $600,000 and include 210 individual customer accounts. Of the 30 confirmations received from the customers, 25 had no exceptions noted, while 5 confirmations yielded the following results:

Account Recorded Customer's Comments Client's Comments We already paid $4,000 on No record of receiving the October 10, 2021, so we don't payment. owe anything. #13836 52,000 8500 of goods were returned for credit on December 28, 2021 (Shipped FOB destination). So we owe only $1,500. We received returned goods on January 10, 2022 and reduced the customer's balance that day. #K628 81,750 The conrmation was returned and indicated as \"Address Not Found.\" We don't know what happened to the customer and to that accounts receivable. The balance is not material anyway. #F986 54,500 We paid this December 29, 2021. amount 01] We received payments 011 January 8, 2022, and the account was credited that day. #A532 $5,000 led for requests for The company has bankruptcy and payment should be directed to the company's trustee. Looks like this should be written off. We are surprised by this news