The "Accounts Receivable-Confirmation Statistics" working paper shown on the next page was prepared by an audit assistant for the 2015 audit of Lewis County Water Company, Inc., a continuing audit client. The engagement supervisor is reviewing the working papers.

Required:
Describe the deficiencies in the working paper that the engagement supervisor should discover. Assume that the accounts were selected for confirmation on the basis of a sample that was properly planned and documented on the working paper.
(AICPA, adapted)

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LEWIS COUNTY WATER CO., INC. Number Percent Percent Confirmation requests sent 2.7% $ 260,000 13.0% 140 Total Accounts selected/client asked us not to confirm Total selected for testing Total accounts receivable at 12/31/15, confirm d 200 10.0 $2,000,000V* 100.0 Replies received through 2/25/16: Positives-no exception Negatives-did not reply or replied "no exception" Total confirmed without exception Differences reported and resolved, no adjustment: $180,000 $ 30,000 1.5 12 Total Differences found to be potential adjustments: $10,000 0 0.4 Total 0.6% adjustment, immaterial Accounts selected/client asked us not to confirm Tick Mark Legend Agreed to accounts recevable subsidiary ledger ф C CX Agreed to general ledger and lead schedule. -indudes one related-party transaction. Confirmed without exception, WP B-4 Confirmed with exception, WP B-5. Conclusion: The potential adjustment of $12,000 or 0.6%, ls below the materiality threshold; therefore, the accounts recen able balance is fairly stated.