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Word Count: 695
Giant Store Case 1Management assertion of completeness is of primary concern to an auditor because of the nature of accounts payable which is prone to understatement 2The nature of search for unrecorded liabilities as a year-end substantive test for a clients current liability is to make sure they are not understated Auditor can send out confirmation letter and ask client for a list of liabilities they could also seek for the subsequent activities to make sure these liabilities have been paid In this case if the client did pursue those credit and directly confirm these credit from Giant Stores suppliers the fraud may have been detected 3Touche Ross can stratified the sample and randomly select credits from these pre-sorted block to test the material accuracy of the purported advertising credits The sample size shouldnt be too small 4Validity of audit evidence collected via telephone confirmation is compromised because via telephone the client can manipulate the information they may not come from the right person the auditor wants to talk to If the confirmation via mail is not viable and the audit is sure the phone client dialed is the client they want to talk to and the client hasnt inform the person they called in advance the confirmation may be perceived creditable 5The return rate for confirmation of account payable may well exceed that of account receivable so for account payable supplement control may only include letter to the legal councilor to confirm the contigent legal liabilities and the subsequent follow-up of payment of accounts payable But for account receivable the return rate may be too low to be relied on so a list of supplemental measures including the directly calling and check of subsequent payment may be greatly pursued 6The difference of opinions arising from the staff auditors and the engagement partner may be resolved by the communication discussion and taken into the higher level If the engagement
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