The FASB has reduced the wide latitude that companies once had in accounting for vendor

rebates by issuing EITF Issue No. 02-16. What recommendations would you suggest to the

FASB for further improving the accounting and auditing guidance in the area of vendor

rebates? State THREE (3) recommendations.

List THREE (3) the alternative substantive tests available to the auditors of

BestFood Corporation

(6 Marks)

(ii) Explain how the alternate audit procedures differ from typical accounts receivable

confirmation?

(4 Marks)13

6. (i) What lessons can be learned from the BestFood Corporation case concerning over

reliance on third-party confirmations? Provide THREE (3) lessons.

(6 Marks)

(ii) Explain the audit risks associated with the external auditor for the BestFood

Corporation.