Assume that your understanding of internal controls over acquisitions and cash disbursements and the related tests of controls and substantive tests of transactions support an assessment of a low control risk. The listing of the 519 accounts making up the accounts payable balance of $12,969,686 at December 31, 2023.

A.) List those relationships, ratios, and trends that you believe will provide useful information about the overall reasonableness of accounts payable. You should consider income statement accounts, that affect accounts, payable and selecting the analytical procedures.

B.) Study Table 18-5 containing balance-related audit objectives and tests of details of balances for accounts payable to be sure you understand each procedure and its purpose. Prepare an audit program for accounts payable in a performance format, using the audit procedures in Table 18-5. The format of the audit program should be similar to Table 16-5. Be sure to include a sample size for each procedure.

C.) Assume for requirement b. that (1) assessed control risk had been high rather than low for each transaction-related audit objective, (2) inherent risk was high for each balance-related audit objective, and (3) analytical procedures indicated a high potential for misstatement. What would the effect have been on the audit procedures and sample sizes for requirement b.?

D.) Confirmation requests were sent to a stratified sample of 51 vendors listed in Figure 16-8. Confirmation responses from 45 vendors were returned indicating no difference between the vendors and the companys records. Figure 16-9 presents the six replies that indicate a difference between the vendors balance and the companys records. The auditors follow-up findings are indicated on each reply. Prepare an audit schedule similar to the one illustrated in Figure 16-10 to determine the misstatements, if any, for each difference. The audit schedule format shown in Figure 16-10 is available at pearsonhighered.com/arens. The exception for Fiberchem is analyzed as an illustration. Assume that Pinnacle Manufacturing took a complete physical inventory at December 31, 2023, and the auditor concluded that recorded inventory reflects all inventory on hand at the balance sheet date. Include the balances confirmed without exception as one amount on the schedule for each stratum, and total the schedule columns.

Figure 16-8 Pinnacle Manufacturing Sample of Accounts Payable Selected for Confirmation-December 31, 2023 High-Volume Items (>$250,000) 1. AMERICAN PRESS 2. CLEAN-O-RAMA, CO. 3. FIBERCHEM 4. RUFUS AUSTIN ANTIQUES 5. TODD-MACHINERY 6. WELBURN MANUFACTURING Large Balance Items ($60,001$250,000) 1. A \& M SANDLER INC 2. AMERICAN BABY % USTC 3. BEACH \& HOOVER REFINING 4. BEARING DRIVES CO 5. BURTON MARTIN 6. CABLE SYS / IND TRAF CONS 7. EDDIE VENTURA, INC. 8. FIBEROPTICS 9. FINISH METALS INC 10. FREEMAN FURNITURE - ATTN A/P 11. GODWIN DRUG COMPANY 12. GP CHAMBERS CO 13. HOLY FAMILY HOSPITAL 14. LAS FLORES DESIGNS INC 15. LEAN CORP 16. MACDONALD SVC CORPORATION 17. MCCOYS INC 18. METADYNE CORP 19. MICRON POWER SYSTEMS 20. MOBIL OIL 21. NATIONAL ELEVATOR \& MACH CO 22. NORRIS INDUSTRIES 23. R \& B PRODUCTS 24. REMINGTON SUPPLY 25. SAFETY ENVELOPE CO 26. SCANDEC USA INC 27. THE DUTTON COMPANY 28. THE HABERDASHERY CO 29. UNIVERSITY OF CALIFORNIA 30. ZZZZ BANK ADJUSTMENTS Ite hs $60,000 and less 1. ADVENT SIGN MFG. CO. 2. B\&K MFG CO INC 3. BELLCO 4. BOSTON SHOECASE CO 5. DYNAMIC METAL PRODUCTS 6. EVERHART CO 7. FULLER TRAVEL 8. GOOD HOUSE HOME VIDEO INC 9. HARRAH'S METALS, INC. 10. J C LICHT CO-GLENDALE HTS 11. LIBERTY LIGHTING 12. LONG BEACH LAWN SERVICE 13. PREMIER WHIRLPOOL BATH 14. QUAKER TRANSANALYSIS 15. TOWER INTERNATIONAL TOTAL TESTED \$ 340,767.94 317,668.63 793,049.89 400,046.08 531,073.93 388,836.07 \$ 81,348.54 75,432.73 76,408.79 73,017.24 78,682.54 71,288.95 60,255.55 60,102.78 60,769.71 130,493.51 84,331.05 64,125.44 117,916.83 88,644.92 67,985.23 147,943.95 67,936.32 85,432.51 136,071.37 93,210.48 76,921.40 88,314.64 80,092.46 123,411.24 223,950.34 65,942.94 63,882.02 71,869.16 80,624.95 64,471.21 \begin{tabular}{|c|c|c|c|} \hline \multirow[t]{15}{*}{$} & 51,750.00 & & \\ \hline & 42,668.50 & & \\ \hline & 42,710.74 & & \\ \hline & 52,174.50 & & \\ \hline & 36,546.05 & & \\ \hline & 47,519.14 & & \\ \hline & 32,470.11 & & \\ \hline & 46,472.67 & & \\ \hline & 51,279.85 & & \\ \hline & 53,228.47 & & \\ \hline & 46,802.78 & & \\ \hline & 48,488.96 & & \\ \hline & 6,550.33 & & \\ \hline & 50,363.69 & & \\ \hline & 37,299.55 & $ & 646,325.34 \\ \hline & & $ & 6,078,646.68 \\ \hline \end{tabular} Replles to Requests for Infor mation FIGURE 16-10 Pinnacle Manufacturing Analysis of Trade Accounts Payable--December 31, 2023