Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 43

Substantive test of balances. Refer to Appendix A for five replies from customers of BCS Inc. in response to the receivables confirmation conducted by Stuart Cram, the BCS auditor and a copy of two letters for which replies have not yet been received.
a. For each reply, explain what you think has happened, how you would verify your explanation, and whether the reply represents a misstatement in the BCS accounts. If so, prepare the adjusting entry.
b. For the two nonreplies, explain what other method the auditor could use to obtain some assurance on the balances involved.