You are an audit senior of Auditron & Co and are currently conducting the audit of Winterking for the year ended 30 June 2019. Materiality has been set at $100,000, and you are carrying out the detailed substantive testing on the year-end Payables Ledger balances. Understatement of the Trade Payables balances was identified as a significant audit risk during the planning process.
This is an extract from the list of supplier statements as at 30 June 2019 held by the company and corresponding Payables Ledger balances at the same date along with some commentary on the noted differences:

Screwport
The difference in the balance is due to an invoice which is under dispute due to faulty goods which were returned on 29 June 2019.
Washpot
The difference in the balance is due to the supplier statement showing an invoice dated 28 June 2019 for $140,000 which was not recorded in the financial statements until after the year end. The payables clerk has advised the audit team that the invoice was not received until 2 July 2019.
The audit manager has asked you to review the full list of trade payables and select balances on which supplier statement reconciliations will be performed.
Which of the following items should you select for testing?
(1) Suppliers with material balances at the year end
(2) Suppliers which have a high volume of business with Winterking
(3) Major suppliers with nil balances at the year end
(4) Major suppliers where the statement agrees to the ledger
A) 1 only
B) 1, 2 and 3 only
C) 2 and 4 only
D) 1, 2, 3 and 4

Question

You are an audit senior of Auditron & Co and are currently conducting the audit of Winterking for the year ended 30 June 2019. Materiality has been set at $100,000, and you are carrying out the detailed substantive testing on the year-end Payables Ledger balances. Understatement of the Trade Payables balances was identified as a significant audit risk during the planning process.
This is an extract from the list of supplier statements as at 30 June 2019 held by the company and corresponding Payables Ledger balances at the same date along with some commentary on the noted differences:

Screwport
The difference in the balance is due to an invoice which is under dispute due to faulty goods which were returned on 29 June 2019.
Washpot
The difference in the balance is due to the supplier statement showing an invoice dated 28 June 2019 for $140,000 which was not recorded in the financial statements until after the year end. The payables clerk has advised the audit team that the invoice was not received until 2 July 2019.
The audit manager has asked you to review the full list of trade payables and select balances on which supplier statement reconciliations will be performed.
Which of the following items should you select for testing?
(1) Suppliers with material balances at the year end
(2) Suppliers which have a high volume of business with Winterking
(3) Major suppliers with nil balances at the year end
(4) Major suppliers where the statement agrees to the ledger
A) 1 only 
B) 1, 2 and 3 only 
C) 2 and 4 only 
D) 1, 2, 3 and 4

Quizplus · Accepted Answer

The Answer of You are an audit senior of Auditron & Co and are currently conducting the audit of Winterking for the year ended 30 June 2019. Materiality has been set at $100,000, and you are carrying out the detailed substantive testing on the year-end Payables Ledger balances. Understatement of the Trade Payables balances was identified as a significant audit risk during the planning process.
This is an extract from the list of supplier statements as at 30 June 2019 held by the company and corresponding Payables Ledger balances at the same date along with some commentary on the noted differences:

Screwport
The difference in the balance is due to an invoice which is under dispute due to faulty goods which were returned on 29 June 2019.
Washpot
The difference in the balance is due to the supplier statement showing an invoice dated 28 June 2019 for $140,000 which was not recorded in the financial statements until after the year end. The payables clerk has advised the audit team that the invoice was not received until 2 July 2019.
The audit manager has asked you to review the full list of trade payables and select balances on which supplier statement reconciliations will be performed.
Which of the following items should you select for testing?
(1) Suppliers with material balances at the year end
(2) Suppliers which have a high volume of business with Winterking
(3) Major suppliers with nil balances at the year end
(4) Major suppliers where the statement agrees to the ledger
A) 1 only 
B) 1, 2 and 3 only 
C) 2 and 4 only 
D) 1, 2, 3 and 4

You Are an Audit Senior of Auditron & Co and Are