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Cannavaro Co runs a website design company. The end of the year was 31 December 2014. You are the audit manager and the year-end audit

Cannavaro Co runs a website design company. The end of the year was 31 December 2014.

You are the audit manager and the year-end audit will begin shortly. The following issue has been brought to your attention. Torres' trade receivables have historically been low as most members pay monthly in advance. However, during the year some companies acquired group memberships in Cannavaro, so the credit balance is now significant. The senior auditing undertook a credit circulation for balances at year-end; however, there are also non-responders and differing responses.

It was also revealed during the audit that Pirlo Co, a key customer with a credit balance of €15,000 at year-end, reported to Cannavaro.com that they had cash flow problems and were therefore unable to make any payments. Payments for the foreseeable future. The finance director informed the audit team that he would write this balance off as an irrecoverable liability in the 20X5 financial statements.

Necessary:

a) Describe the substantive procedures you will use to obtain sufficient appropriate audit evidence regarding Cannavaro's trade receivables.

b) What should the auditor do if the client does not allow additional credit confirmations?


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