You are in the final stages of your audit of the Ozine Corporation's financial statements for the year ended December 31, 1999, when the corporation's chief executive officer, Gordon Sumner, approaches you. Sumner believes there is no point in your examining purchases transacted on or after January 1, 2000, since: (1) bills pertaining to 1999 that were received too late to be included in the December voucher register were recorded as of year end by journal entry, (2) the internal auditor made tests after year end, and (3) he (Sumner) would furnish you with a letter certifying that there were no unrecorded liabilities. 

Required:

1. Should an auditor's test for unrecorded liabilities be affected by the fact that the client made a journal entry to record 1999 bills that were received late? Discuss.

2. Should an auditor'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 or her knowledge all liabilities have been recorded? Discuss.

3. Should an auditor's test for unrecorded liabilities be eliminated or reduced because of the internal audit tests? Discuss.

4. Assume that the corporation had no internal auditor but, owing to some government contracts, an auditor for a federal agency had spent three weeks auditing the records. How would the auditor's unrecorded liability test be affected by the work of the federal auditor?

5. What sources, in addition to the 2000 voucher register, should the auditor consider to locate possible unrecorded liabilities?