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

question 82

Essay

Confirmations of receivables
You are the auditor of Maple Bank for the year 2012.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:

Expenditures

The total amount of money spent by an individual, firm, or government on goods and services.

Income

The earnings acquired, often periodically, for performing job duties or from investment gains.

Net Exports

The value of a country's total exports minus its total imports, representing the net amount of goods and services being traded with other countries.

GDP Deflator

An indicator used to determine the price levels of newly produced domestic final goods and services, assisting in the conversion of nominal GDP to real GDP.