Part I. Lernout & Hauspie (L&H) was the world's leading provider of speech and language technology products, solutions, and services to businesses and individuals worldwide. Both Microsoft and Intel invested millions in L&H. However, accounting scandals and fraud allegations sent the company's stock crashing and forced the firm to seek bankruptcy protection in Belgium and the United States. The following selected information pertains to L&H's sales and accounts receivable: Consolidated revenue increased 184 percent from the 1997 fiscal year to the 1998 fiscal year. Revenue in South Korea, which has a reputation as a difficult market for foreign companies to enter, increased from $97,000 in the first quarter of 1999 to approximately $59 million in the first quarter of 2000. . In the second quarter of 2000, sales grew by 104 percent but accounts receivable grew by 128 percent Average days outstanding increased from 138 days in 1998 to 160 days for the six-month period ended June 30, 2000. Required: 1a. Based on the above information which assertion for sales would the auditor be most concerned with existence or occurrence. 2b. Based on the above information which assertion for accounts receivable would the auditor be most concerned with existence or occurrence. 1c. Which of the following would be the best audit evidence to verify the assertion of sales? The auditors could have interviewed personnel at Lernout & Hauspie to inquire as to the validity of the sales. O The auditors could have reviewed a listing of invoices to ensure that the total amount invoiced matched the revenues recorded. The auditors could have examined documentation for sales transactions, particularly searching for valid sales orders and evidence that the products sold were shipped. O The auditors could have examined the revenue amounts for other customers in the same industry and compared to Lernout & Hauspie's recorded revenues. Part II. L&H's auditor did not confirm accounts receivable from customers in South Korea. However, The Wall Street Journal contacted 18 of L&H's South Korean customers and learned the following: Three out of 18 customers listed by L&H stated that they were not L&H customers. Three others indicated that their purchases from L&H were smaller than those reported by L&H. Required: 1d. Which of the following would be the best audit evidence to verify the assertion of accounts receivable? Multiple Choice The auditors could have interviewed personnel at Lernout & Hauspie to inquire as to the validity of the accounts receivable. The auditors could have examined the accounts receivable percentage of other companies in the same industry and compared to Lernout & Hauspie's recorded amounts. The auditor could confirm a sample of accounts receivable with customers, perhaps asking the customers to fill in the dollar amount that they owe as of the balance sheet date. The auditors could have reviewed the accounts receivable accounts to determine if they are consistent with the sales for each customer