Reference no: EM132521031

Question - Paul Ma is responsible for the acquisition and payment cycle of Raleigh Corporation. Inherent risk for accounts payable is high due to the following risk factors: client's bank covenants are tied to the current ratio and management receives bonuses based upon net income. Controls tend to be strong; however, due to some errors in the past, control risk has been set at moderate.

Accounts Payable Substantive Tests

Ma selected the 100 largest supplier balances from the total of 1000 suppliers recorded in the accounts payable subledger and sent out confirmations.

Required - Based upon the risk factors discussed above (bank covenants and management bonuses) what is the relevant assertion at risk of misstatement for accounts payable? Explain why.