Melissa is the audit senior for the audit of Grosse Ltd., and she has been given the audit file to review. The reporting date is December 31, 2020, and the materiality for the client has been set at $200,000. The following is information obtained from her review of the audit file: 1. The balance noted for accounts payable in the general ledger at December 31, 2020, is $158,000, compared with a balance as at December 31, 2019, of $342,000. 2. The audit assistant noted in the file: Because the accounts payable balance is immaterial in the current year, only limited work is necessary. 3. The only work performed by the audit assistant was to select the three largest payables from the clients detailed purchases ledger (which had been compared with the general ledger) and compare the balances with copies of supplier statements.

Which of the following comments should Melissa have with respect to the work performed? Select all that apply when audit account payable.

A. Because the accounts payable balance is not material, no further work is required.

B. The auditor should ask management why accounts payable has decreased by $184,000 between December 31, 2019, and December 31, 2020. If the explanation appears reasonable, no further work is necessary.

C. The accounts payable balance may be immaterial compared to the overall materiality, but it is probably not immaterial compared to the materiality allocated to accounts payable.

D. Potential errors in relation to accounts payable may be material. This is because the main risk associated with accounts payable is overstatement.

E. The sample selected is not appropriate. It would be preferable for the auditor to use statistical techniques to select the sample size.

F. The balances of the creditors selected for testing should be reconciled to the original suppliers statements.

G. Selection of the three largest balances is appropriate because the main risk associated with payables is understatement.