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:

Chemically

Pertaining to or involving the use of chemistry or chemicals in processes, reactions, or properties.

Paracrine Signaling

A form of cell-to-cell communication in which a cell produces a signal to induce changes in nearby cells, affecting their behavior or function.

Interstitial Fluid

The fluid that occupies the spaces between cells in a tissue, providing a means of nutrient and waste transport between blood vessels and cells.

Electrical Signals

Pulses of charged particles used for communication within and between neurons and other cells, essential for body functions.