Confirmations

You are the audit manager for the Teper and Lubetsky, Auditors, on the engagement with their client, Da Silva Corporation.

You are discussing the potential use of Confirmations to assist in the evaluation of the existence and valuation of Da Silva's Accounts Receivable balance from its customers.

Members of your audit team make the following suggestions:

Albert Auyung. CPA, suggests Confirmations be sent to a sample of Da Silva Corporations' customers with a request that the Confirmations be returned directly to Teper and Lubetsky, Auditors. Albert wants the receivables data provided by Da Silva Corporation entered into the Confirmation documents to be sent to Da Silva's customers.

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Berenice Braga, CPA, also suggests Confirmations be sent to a sample of Da Silva Corporations' customers with a request that the Confirmations be returned directly to the Teper and Lubetsky, Auditors. However, Berenice wants those customers to search their own records and enter the dollar amounts on the Confirmations rather than providing any data.

Chandra Chakrobarti, CPA, partially agrees with Albert's suggestion to send Confirmations to a sample of Da Silva Corporations' customers and with Albert's suggestion that the data provided by Da Silva Corporation be entered into the Confirmation documents before being sent.

However, Chandra wants to ask Da Silva's customers to return the Confirmation to Teper and Lubetsky, Auditors only if they disagree or dispute the amounts on the Confirmation document.

Lastly, Donna Dingwall, CPA, does not want to use Confirmations. Donna suggests using substitute audit procdures.

Donna notes the two following arguments to support her idea:

A. It is less expensive for the Teper and Lubetsky audit team to perform these substitute audit procedures compared to sending Confirmations.

B. The dollar amount of Da Silva Corporation's receivables are not material to this audit.

Match the below descriptions with the best choice available at the right side of your

screen.

Use each choice only once.

Page 2:

The best term describing

Chandra's suggestion.

Page 3:

1. Da Silva Corporation.

The best term describing

Albert's suggestion.

Page 4:

The Auditee

2. Positive confirmation (regular).

Page 5:

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6

40

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The best term describing Berenice's suggestion.

3. Positive confirmation (blank).

4. Negative confirmation.

Donna's argument A. It is

less expensive for the Teper

and Lubetsky audit team to perform these substitute audit procedures compared to sending Confirmations.

5. One of Donna's argument that is valid and appropriate, assuming it is true.

6. One of Donna's argument that is NOT valid and NOT appropriate.

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Donna's argument B. The dollar amount of Da Silva Corporations receivables are not material to this

audit.