Reference no: EM132461386

Problem - Accounts Receivable Vs Accounts Payable

As part of your first audit of the financial statements of Sugarland Company you have decided to confirm some of the accounts payable. You are now in the process of selecting the individual companies to whom you will send the accounts payable confirmation requests. Among the accounts payable you are considering are the following:

Required -

a) Which of the above four accounts payable would you select as the most important to confirm? Explain your choice in terms of the audit assertion being tested and why it is important in the audit of accounts payable. Include the key audit assertion being tested in your answer.

b) Assume that you are selecting accounts receivable to be confirmed. Assume also that the four companies listed above are customers of your client rather than suppliers and that the dollar amounts are accounts receivables balances and total sales for the year. Which two companies would you select as the most important to confirm? Explain your choice in terms of the audit assertion being tested and why it is important in the audit of accounts receivable.