L. King, CPA, is auditing the financial statements of Cycle Company, a client that has receivables from

Question:

L. King, CPA, is auditing the of Cycle Company, a client that has receivables from customers arising from the sale of goods in the normal course of business. King is aware that the confirmation of is a generally accepted auditing procedure.

Required:
a. Under what circumstances could King justify omitting the confirmation of Cycle’s
b. In designing confirmation requests, what factors are likely to affect King’s assessment of the reliability of confirmations that King sends?
c. What alternative procedures could King consider performing when replies to positive confirmation requests are not received?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...