John & Johnson, CPAs, has been engaged to audit Shipps Machinery for the year ended December $31,$ Year $1.$

Shipps Machinery

Select Accounts as of $12/31/$Year $1$

Account Amount

Cash $$1,523,000$

Accounts receivable $298,500$

PP&E $2,485,600$

Investments $198,500$

Accounts payable $245,200$

Contingencies $200,000$

Long$-$term debt $1,526,000$

$1.$ To check the existence assertion for Accounts Receivable, the auditor sent accounts receivable confirmations to $50$ customers on $1/10/$Year $2.$ Forty$-$five of the confirmation responses were received back by mail, four confirmations were not received back and were tested without exception using alternative procedures, and one confirmation response was received by email on $2/1/$Year $2($see $"$E$-$mail From Customer" at below$).$

$(1)$ Is the evidence collected sufficient and appropriate? A$.$Yes$\_\_\_\_$ B$.$ No$\_\_\_\_\_$

$(2)$ Please determine the auditor's next likely action by selecting the appropriate option from the list provided at the bottom of this question $($Options A$-$J$)$:$\_\_\_\_\_\_\_\_\_\_\_\_$

List for the auditor's next likely actions:

A$.$ No further action is needed.

B$.$ Accounts payable confirmations should be sent to a sample of vendors with large outstanding balances at year$-$end.

C$.$ Confirmation responses received electronically should be verified by calling the sender and the sender is also requested to mail the original confirmation directly to the auditor.

D$.$ Confirmations should be sent to an additional sample of customers for further evidence.

E$.$ Engage an audit specialist to review lawsuit and determine independent probability of loss.

F$.$ Inquiries of management should be made as to the $$0$ balance account, as this may be a sign of fraud.

G$.$ Propose an adjusting journal entry for the maintenance expense incorrectly excluded from Year $1.$

H$.$ Request that the attorney send an exact amount of probable loss.

I. Separate confirmation request should be sent to request information regarding any loans or liens outstanding.

J$.$ To test for completeness, perform a search for unrecorded liabilities.