The following are situations or questions pertaining to the audit of accounts payable:

a. With regard to statements requested from vendors, the auditor's memo states, "We requested statements from all vendors with balances over \(\$ 2,000\) as shown by the trial balance." Do you feel this procedure is satisfactory? Give reasons for your answer.

b. Why should an auditor be particularly careful to investigate past-due accounts payable?

c. Discuss some of the sources from which the auditor can prepare a list of vendors from whom statements should be requested.

d. All vendors' statements on hand and received by the auditor have been reconciled by the company at the auditor's request. How much testing of the reconcilements should be done?

e. In connection with the year-end audit of trade accounts payable, the following are noted; describe briefly what each could indicate and what audit procedures you would follow in the circumstances:

(1) Several long-standing credit balances.

(2) A number of debit balances included in accounts payable.

(3) A substantial dollar amount of purchase commitments in a situation of declining market prices.

(Used with permission of Ernst E Young)