In confirming a client's accounts receivable in prior years, an auditor found that there were many differences between the recorded account balances and the confirmation replies. These differences, which were not misstatements, required substantial time to resolve. In defining the sampling unit for the current year's audit, the auditor most likely would choose:

Question

Quizplus · Accepted Answer

Choice "B" is correct. The auditor should consider the nature of the information requested when determining the sampling unit for the current year audit. Certain respondents' accounting systems may facilitate the confirmation of single transactions rather than of entire balances. Choice "A" is incorrect. The auditor would not limit the population to overdue balances, since current balances can also be misstated. Choices "C" and "D" are incorrect. Defining the sampling unit based on account size would not address the problem that caused differences during the prior year.

In Confirming a Client's Accounts Receivable in Prior Years, an Auditor