Question 3 (5 marks)

SoftSleep Inc. (SSI), a Canadian pillow manufacturer, began operations on

January 1, and is being audited for the first time. Sammie Walton, a new hire right out of university, has been added to the audit team to help audit SSI. Sammie has been asked to audit the trade accounts payable balance, starting with the riskiest assertions in order to be most effective with his time.

Required:

1. Explain to Sammie what audit assertion has the highest risk related to accounts payable and why. (1 mark)
2. Assume that Sammies first audit procedure will be to send confirmations to test accounts payable. Provide three examples of criteria that could be used in order to select suppliers that will be sent confirmations, ensuring that at least one is focused on the assertion of the highest risk. (2 marks)
3. Describe the process Sammie should follow when sending SSIs accounts payable confirmations. (2 marks)