John is a junior auditor who developed the following audit program for accounts receivable. The interim audit is to be completed by the end of October and the year end is December 31.

Audit procedure	Nature	Extent	Timing
Select several accounts from listing prepared by client	Analytical procedures	Choose 3% of all accounts	Interim audit
Send negative confirmations to selected accounts	Confirmation	All accounts with a balance	Interim audit
Send negative confirmations to selected accounts	Confirmation	All accounts from interim audit test with a zero balance at year-end	Year-end audit

Required:

a. Based on the selection method in John's program, does it appear that John has assessed the control risk as high or low? Explain your answer.

b. Assume that the audit manager disagreed with John's assessment of the control risk. State how each of the above procedures should be modified to reflect the audit manager's assessment of the control risk.

Answer rating: 100% (QA)

a Based on the selection method in Johns program it appears that John has assessed the control risk ... View the full answer