Confirmations of Receivables. You Are the Auditor of Maple Bank for the Year

question 17

Essay

Confirmations of receivables.
You are the auditor of Maple Bank for the year 2010. Maple has a large number of customers with consumer loan accounts. The loan accounts have balances averaging $800 in a homogeneous population and the customers usually pay close attention to their balances.
Your preliminary assessment of internal control over the loan area is that control risk is low and results of tests of controls support that assessment. Inherent risk is deemed to be lower as well.
Discuss the confirmation process and the types of confirmations that may be used for the audit of Maple Bank. Which confirmation type would you select for Maple and why?

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Definitions:

Duty of Confidentiality

The legal obligation of attorneys to not disclose information related to the representation of a client.

Key Suspect

An individual believed to have played a significant role in committing a crime and is the focus of a criminal investigation.

Adequate Attorney Supervision

Refers to the requirement that lawyers must properly oversee the work of their subordinates, ensuring it meets legal standards and ethics.

Supervising Attorney

A lawyer who has responsibility for overseeing the work of other attorneys, paralegals, and legal staff within a law firm or legal department, ensuring compliance with legal standards and practices.