As part of a team of auditors assigned to audit Dandelion Limited, a furniture retailer, for year ended 2020 December 31, you have been asked to verify trade creditors $1 200 000 and accruals $400 000. The company buys items on credit from small furniture manufacturers.

B. Explain the importance of a bank letter as part of the procedure of obtaining confirmations from a bank. (6 marks)