The following Accounts Receivable—Confirmation Statistics working paper (indexed B-3) was prepared by an audit assistant during the calendar year 20X1 audit of Lewis County Water Co., Inc., a continuing audit client.The engagement supervisor is reviewing the working papers. Lewis County Water Co., Inc.
ACCOUNTS RECEIVABLE—CONFIRMATION STATISTICS
12/31/X1 | REQUESTS | Accounts | Dollars | | Number | Percent | Amount | Percent | | Confirmation requests sent | 200 | 10% | 352,500 | 10.1% | | | | | | | | Total accounts receivable at 12/31/X1, confirm date | 2,000 | 100.0% | $3,500,000
AR, AG | 100.0% | | RESULTS | | | | | | Replies received through 2/25/X2 | | | | | | Total confirmed without exception | 164 C | 8.2% | 196,000 | 9.8% | | Differences reported and resolved, no adjustment | 18# | .9% | 32,000 | 1.6% | Differences found to be potential adjustments
Book Value
Audited Value
Misstatement |
10 CX |
5% |
50,000
38,000
12,000 |
.6% | | No reply received to confirmation | 6 | .3% | $ 72,500 | 3.6% | Tickmark legend | AR | Agreed to accounts receivable subsidiary ledger | | AG | Agreed to general ledger and lead schedule | | # | Includes one related-party transaction | | C | Confirmed without exception, W/P B-4 | | CX | Confirmed with exception, W/P B-5 | Overall conclusion—The potential adjustment of $12,000 or .6% is below materiality threshold; therefore, the accounts receivable balance is fairly stated.
Reply as to whether you agree or disagree with the following review comments made by the reviewer of this working paper. 6.There should be an indication of follow-up or cross-referencing of the account confirmed related-party transaction.
A. Agree
B. Disagree
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