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Indicate which of the below statements about the deficiencies in the working paper that the engagement supervisor should discover are correct and which are incorrect. Assume that the accounts were selected for confirmation on the basis of a sample that was properly planned and documented on working paper B-3.

Statement about deficiency	Correct	Incorrect
1. The working paper was not initialed and dated by the audit assistant.
2. Negative confirmations not returned can be considered to be accounts "confirmed without exception."
3. All confirmations are accounted for.
4. There is no documentation of alternate procedures, possible scope limitation, or other working paper reference for the six accounts selected for confirmation that the client asked the auditor not to confirm.
5. The dollar amount and percent of the six accounts selected for confirmation that the client asked the auditor not to confirm are properly omitted from the "Dollars" columns for the "Total selected for testing."
6. The "DollarsPercent" for "Confirmation RequestsNegatives" is correctly calculated at 10%.
7. There is no indication of follow-up or cross-referencing of the account confirmedrelated party transaction.
8. The tickmark "" is used but is not explained in the tickmark legend.
9. There is no explanation of the 10 differences aggregating $12,000.
10. The overall conclusion reached is appropriate.
11. There is no notation that a projection from the sample to the population was made.
12. There is no reference to second requests.
13. Cross-referencing is incomplete for the 12 "Differences reported and resolved, no adjustment."

Conclusion X From: john.adams@accounting.com To: bob.feldman@accounting.com Subject: RE: Lewis County Water Co., Inc. Hi Bob, My overall conclusion is that the potential adjustment of $12,000 or .6% is below the materiality threshold. Thus, the accounts receivable balance is fairly stated. Thank you, John Adams Audit Assistant Email about Final Conclusion From: bob.feldman@accounting.com To: john.adams@accounting.com Subject: RE: Lewis County Water Co., Inc. Hi John, Everything looks good. Thank you for your hard work. What is your overall conclusion on the Accounts Receivable - Confirmation Statistics work paper? Best, Bob Feldman Engagement Supervisor Email to Engagement Associate From: john.adams@accounting.com To: bob.feldman@accounting.com Subject: Lewis County Water Co., Inc. Hi Bob, We met a few days ago, however, as a refresher I am a first year audit assistant assigned to your engagement and I was tasked with reviewing accounts receivable for Lewis County Water Co., Inc. I noted that alternative procedures were performed for accounts when (a) no response was received for confirmation requests and (b) confirmation requests were not sent. I understand they are a continuing audit client, therefore, I have carefully completed the accounts receivable working paper. Please let me know if you have any questions. Thank you, John Adams Audit Assistant Highlight Remove Highlig Lewis County Water Co., Inc. ACCOUNTS RECEIVABLE - CONFIRMATION STATISTICS 12/31/Yr 1 Index B-3 Accounts Dollars Number Percent Amount Percent 54 2.70% $260,000 13.00% 140 7.00% 20,000 10.00% 194 7.00% 280,000 23.00% 6 0.30% 200 10.00% 2,000 100.00% $2,000,000 V100.00% PRELIMINARY TESTING INFORMATION Confirmation Requests Positives Negatives Total sent Accounts selected/client asked us not to confirm Total accounts selected for testing Total accounts receivable at 12/31/Yr 1, confirm date RESULTS Replies received through 2/25/Yr 2 Positives - no exception Negatives - did not reply or replied no exception" Total confirmed without exception Differences reported and resolved, no adjustment Positives Negatives Total Differences found to be potential adjustments Positives Negatives Total - .6% adjustment, immaterial Accounts selected/client asked us not to confirm 44 C 120 C 164 2.20% 6.00% 8.20% 180,000 16,000 196,000 9.00% 0.80% 9.80% 6 12 18+ 0.30% 0.60% 0.90% 30,000 2,000 32,000 1.50% 0.10% 1.60% 2 CX 8 CX 10 0.10% 0.40% 0.50% 10,000 2,000 12,000 0.50% 0.10% 0.60% 6 0.30% Tickmark Legend Agreed to accounts receivable subsidiary ledger Agreed to general ledger and lead schedule Includes one related party transaction Confirmed without exception, W/P B-4 Conclusion X From: john.adams@accounting.com To: bob.feldman@accounting.com Subject: RE: Lewis County Water Co., Inc. Hi Bob, My overall conclusion is that the potential adjustment of $12,000 or .6% is below the materiality threshold. Thus, the accounts receivable balance is fairly stated. Thank you, John Adams Audit Assistant Email about Final Conclusion From: bob.feldman@accounting.com To: john.adams@accounting.com Subject: RE: Lewis County Water Co., Inc. Hi John, Everything looks good. Thank you for your hard work. What is your overall conclusion on the Accounts Receivable - Confirmation Statistics work paper? Best, Bob Feldman Engagement Supervisor Email to Engagement Associate From: john.adams@accounting.com To: bob.feldman@accounting.com Subject: Lewis County Water Co., Inc. Hi Bob, We met a few days ago, however, as a refresher I am a first year audit assistant assigned to your engagement and I was tasked with reviewing accounts receivable for Lewis County Water Co., Inc. I noted that alternative procedures were performed for accounts when (a) no response was received for confirmation requests and (b) confirmation requests were not sent. I understand they are a continuing audit client, therefore, I have carefully completed the accounts receivable working paper. Please let me know if you have any questions. Thank you, John Adams Audit Assistant Highlight Remove Highlig Lewis County Water Co., Inc. ACCOUNTS RECEIVABLE - CONFIRMATION STATISTICS 12/31/Yr 1 Index B-3 Accounts Dollars Number Percent Amount Percent 54 2.70% $260,000 13.00% 140 7.00% 20,000 10.00% 194 7.00% 280,000 23.00% 6 0.30% 200 10.00% 2,000 100.00% $2,000,000 V100.00% PRELIMINARY TESTING INFORMATION Confirmation Requests Positives Negatives Total sent Accounts selected/client asked us not to confirm Total accounts selected for testing Total accounts receivable at 12/31/Yr 1, confirm date RESULTS Replies received through 2/25/Yr 2 Positives - no exception Negatives - did not reply or replied no exception" Total confirmed without exception Differences reported and resolved, no adjustment Positives Negatives Total Differences found to be potential adjustments Positives Negatives Total - .6% adjustment, immaterial Accounts selected/client asked us not to confirm 44 C 120 C 164 2.20% 6.00% 8.20% 180,000 16,000 196,000 9.00% 0.80% 9.80% 6 12 18+ 0.30% 0.60% 0.90% 30,000 2,000 32,000 1.50% 0.10% 1.60% 2 CX 8 CX 10 0.10% 0.40% 0.50% 10,000 2,000 12,000 0.50% 0.10% 0.60% 6 0.30% Tickmark Legend Agreed to accounts receivable subsidiary ledger Agreed to general ledger and lead schedule Includes one related party transaction Confirmed without exception, W/P B-4