You are the auditor in charge of the audit of LEE Manufacturing CompanySince the company has a large and very material trade receivable balanceyou decide to use trade receivable confirmation requests to gather evidence about the validity of the balances.

Discussion

a.Describe the two forms of trade receivable confirmation requests and indicate what factors

you would consider in determining when to use each.

b.Assume that you receive a satisfactory response to your conformation requests. How would you evaluate the adequacy of the impairment losses on doubtful debts?

c.What auditing steps would you perform if there were no response to the first or second request for a positive confirmation?