It is now January 2021, and the year-end audit work is underway.

You are performing work to address the moderate risk of material misstatement for existence of accounts receivable by performing accounts receivable confirmations. Total accounts receivable at year end was $2,500,000. Based on professional judgment, 100% of balances over $30,000 were confirmed. The remaining book value is the population of representative items, from which a random sample was selected in accordance with CAS 530.

The results of the confirmations are compiled below:

High-value items Book value Audit value Misstatement

Jean's Pub $ 35,000 $35,000 --

Georgio's 40,000 40,000 --

Oceanic 35,000 35,000 --

Libations 62,500 62,500 --

Morty's Lounge and Venue 50,000 42,500 $7,500

Nosh 30,000 30,000 --

Zhen Lounge 72,000 72,000 --

Total $324,500

Representative items*

Chili Pepper $ 6,000 $ 5,200 $ 800

Prana 2,000 1,800 200

Millicent's Caf 1,500 -- 1,500

Devonshire 1,000 -- 1,000

*50 items were sampled, with a total book value of $450,000. Only those where the audit value did not equal the book value are listed in the results.

Performance materiality is $50,000.

Analyze the results and draw conclusions