You are performing an audit of Hawk Company. In evaluating the accounts payable balance you are concerned with the completeness assertion. Which of the following audit procedures best satisfy your concern?
A) send confirmations to only vendors with large balances
B) send confirmations to vendors with large, active, zero balance accounts and a representative sample of all others
C) send confirmations to vendors chosen from sample stratified by the dollar balance
D) send confirmations to all vendors

Question

Quizplus · Accepted Answer

Sending confirmations to only vendors with large balances (choice A) would not provide sufficient evidence for completeness assertion as it would ignore smaller balances. Sending confirmations to all vendors (choice D) might not be feasible as it can be costly and time-consuming. Sending confirmations to vendors chosen from a sample stratified by the dollar balance (choice C) would be a good option but sending confirmations to vendors with large, active, zero balance accounts and a representative sample of all others (choice B) would be the best choice as it would cover both large vendors and a representative sample of others, while also covering active as well as inactive vendors to identify any potential unrecorded liabilities.

You Are Performing an Audit of Hawk Company