You were in the final stages of your examination of the financial statements of Ozine Corporation for the year ended December 31, 19X0 when you were consulted by the Corporation's president who believes there is no

point to your examining the \(19 \times 1\) voucher register and testing data in support of \(19 \times 1\) entries. He stated that

(a) bills pertaining to \(19 \times 0\) which were received too late to be included in the December voucher register were recorded as of the year-end by the Corporation by journal entry,

(b) the internal auditor made tests after the year-end, and

(c) he would furnish you with a letter certifying that there were no unrecorded liabilities.
Required:

a. Should a CPA's test for unrecorded liabilities be affected by the fact that the client made a journal entry to record \(19 X 0\) bills which were received late? Explain.

b. Should a CPA's test for unrecorded liabilities be affected by the fact that a letter is obtained in which a responsible management official certifies that to the best of his knowledge all liabilities have been recorded? Explain.

c. Should a CPA's test for unrecorded liabilities be eliminated or reduced because of the internal audit tests? Explain.

d. Assume that the Corporation, which handled some government contracts, had no internal auditor but that an auditor for a federal agency spent three weeks auditing the records and was just completing his work at this time. How would the CPA's unrecorded liability test be affected by the work of the auditor for a federal agency?

e. What sources in addition to the \(19 X 1\) voucher register should the CPA consider to locate possible unrecorded liabilities?