James Rowe, CPA, is the independent auditor of Raleigh Corporation. Rowe is considering the audit work to be performed in the accounts payable area for the current year's engagement.

The prior year's working papers show that confirmation requests were mailed to 100 of Raleigh's 1,000 suppliers. The selected suppliers were based on Rowe's sample that was designed to select accounts with large dollar balances. A substantial number of hours was spent by Raleigh employees and by Rowe resolving relatively minor differences between the confirmation replies and Raleigh's accounting records. Alternative audit procedures were used for those suppliers that did not respond to the confirmation requests.

Required:

a. Identify the accounts payable audit objectives that Rowe must consider in determining the audit procedures to be followed.

b. Identify situations in which Rowe should use accounts payable confirmations and discuss whether Rowe is required to use them.

c. Discuss why the use of large dollar balances as the basis for selecting accounts payable for confirmation might not be the most efficient approach, and indicate what more efficient procedures could be followed when selecting accounts payable for confirmation.