As this test question is being written in February 2003, some audits of financial statements as of December 31, 2002 and for the year then ended are not yet complete. In some cases, the auditors have not yet received enough confirmations from vendors to, and customers of, their clients to enable them to formulate an opinion as to the appropriateness of the recorded balances of accounts payable and accounts receivable, respectively.

Also at the time this test question is being written in February 2003, the chief executives of France (Chirac) and Germany (Schroder) are refusing to co-operate with President Bush of the United States in the situation with Iraq, which had previously started a war with Iran, then later invaded and occupied Kuwait. When Iraqi forces were ousted from Kuwait, the United Nations forces stopped fighting the Iraqis and left in power in Iraq the person who had started both wars. Now that Iraq has been found to be building weapons which the United Nations had banned it from possessing, France and Germany are taking the positions that, no, keep on inspecting Iraq and if the inspectors don't find anything, then there is nothing there to find--even though French and German companies had apparently been supplying Iraq with the components needed to build those banned weapons. Some French people are extremely nice. If you go visit the Revolutionary War battlefield at Yorktown, Virginia, you discover that there were about 5,000 French soldiers who participated in the battle, and that by themselves they attacked and captured one of the redoubts which protected the British line. If you pay attention, you may also learn that (1) American troops were deserting because they had not been paid, so the French paid (in silver, not in paper money) the American troops who left the siege of New York to go attack the British in Virginia, (2) the French fleet picked up the American troops and transported them part of the way, (3) the French realized that the Americans needed siege cannon to attack the British, but the Americans did not have any, so the French loaned them some, (4) the Americans did not have a coherent plan of attack, so the French drew one up, (5) the French fleet shielded Chesapeake Bay so that the British fleet could not sail in to relieve Cornwallis and his British troops, (6) the French fleet engaged the British fleet which came to relieve Cornwallis, and after some fighting the British under the command of Clinton turned and sailed away, and (7) when the British offered the sword of surrender to the French, the French insisted that it be surrendered to the Americans.

In World War I, when the American Expeditionary Force landed in France in support of the French, the famous phrase uttered (I believe by General Pershing) was "Lafayette, nous voici," which translates to "Lafayette, we are here." In World War II, when the Allied forces drove across France, even though the Free French forces were not numerically as large as other countries' forces, it was given to the Free French forces to lead the way into Paris.

Thus, there is some history of cooperation between France and the United States. Nevertheless, if you talk with tourists and businesspeople, you may find that the French go through swings when they are very eager for tourists and therefore very accommodating, and other times when they are very antagonistic against anybody and anything foreign, even to the point of insisting that everybody else should learn to speak French. (Note to students: In the time of Louis XIV, French was considered the language of diplomacy. Of course, neither Italy nor Germany had yet coalesced from a grouping of states into a single country, so France was the major European power.) You have a front-page article from Le Monde, a major newspaper in Paris, about how this particular businessman is fuming that everybody needs to deal only in French, not in English, whether speaking, writing, e-mailing, or anything else. As it happens, you have just received a faxed confirmation of one of your audit client's accounts receivable over the signature of this particular individual. The fax is addressed to Jeanne Lemaire, the auditor in charge of the engagement. Jeanne was born in France, grew up in France, and is known by the particular businessman to be French. Here is an exact quote from the faxed confirmation, which bore the signature of that businessman.

Dear Mr. Jeanne Lemaire:

Nous avons reu votre lettre dans laquelle vous nous posez la question, est-ce correcte?

Nous disons que oui. Thank you very much, Mr. Lemaire. If we can be of further help, please let us know.

You have it translated by someone who claims to know French. That translator tells you that the first paragraph translates as We have received your letter in which you ask us the question, is this correct? We say yes.

Required:

This material has been faxed to you as a confirmation of a balance of three million Euros owed by that French company to your U.S.-based client. How much of the balance do you consider to have been confirmed? Support your answer.

If you do not consider 100% of the balance to have been confirmed, why not? What else should you do? Support your answer

Thanks