1. The following Accounts receivable Confirmation Statistics working paper (indexed B-3) was
-
prepared by an audit assistant during the calendar year 19X1 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
12/31/91
Accounts Dollars
Nu7nber Percent Amount Percent
Confirmation Requests
Positives 54 2.7% S 260.000 13.0%
Negatives 140 7,0% 20,000 10.0%
Total sent 194 9.7% 280,000 23 0%
Accounts selected/client asked us not to confirm 6 0.3%
Total s.~le. ted for testing 200 10.0%
Total accounts receivable at 12/31/91. confirm date 2,000 100.0% $2,000,000 —* 100.0%
RESULTS
Replies received through 2/25/92
Positives — no exception 44 C 2.2% 180,000 9.0%
Negatives — did not reply or replied “no e;cepuon 120 C 6.0% 16.000
Total confirmed without exceptior. 164 8.2% 196,000
Differences reported and resolved. no a4justment
Positives 6 (p 3% 30.IJ~I 1.5%
Negatives 12 6% 2.’l0i) .1%
Total 18 ~ 9% 32,000 1.6%
Differences found to be potential adjustments
Positives 2 CX .1% 10,000 5%
Negatives 8 CX 4% 2,000 1%
total — 6% a4uuzweent, immaterial 10 5% 12,000
Accounts seie~ted:cli~nt asked us to .‘oiifirm 6 3% 1
.— Agreed to accounts receivable subsidiary ledger
* Agreed to general ledger and lead schedule
0 Includes9ne related party transaction
C Confirmed without exception, W/P B-4
CX ConfirzMd with exceptios.Uff 34
Overall conclusion The pe~ei~t9e1 adju.tmen# r~~$iUcz or E% ~ below materi~fity threshold;
-
therefore, tI~ ~~un?a I~~.ts&innc. is da~u~, ~aw~
RequIred: Describe the deficiencies in the working paper 9at the engagement supervisor
should discover. Assume that the accounts were selected for Confirmation on the basis of ~
sample that was properly planned and documented on working paper B-2.