As a senior auditor at CPA LLP, you are beginning your first audit of Burnaby Ltd. for
Question:
As a senior auditor at CPA LLP, you are beginning your first audit of Burnaby Ltd. for the fiscal year ended December 31, 2021. The engagement team consists of you, the engagement partner, and three junior auditors. Burnaby Ltd. is a retail firm that is publicly listed in the TSX (Toronto Stock Exchange). The company was previously audited by another public accounting firm. During the audit, the following scenarios are encountered. Please respond to the scenario below and summarize your response in a report.
When audit accounts receivable, following your instruction, a junior auditor sent 30 positive
confirmation requests to a random sample of customers as the substantive procedure. The recorded
accounts receivable total $600,000 and include 210 individual customer accounts. Of the 30
confirmations received from the customers, 25 had no exceptions noted, while 5 confirmations
yielded the following results:
Auditing Cases An Interactive Learning Approach
ISBN: 978-0132423502
4th Edition
Authors: Steven M Glover, Douglas F Prawitt