In the course of your initial audit of the financial statements of Sylvan Company, you determine that of the substantial amount of accounts payable outstanding at the close of the period, approximately 75% is owed to six creditors. You have requested that you be permitted to confirm the balances owing to these six creditors by communicating with the creditors, but the president of the company is unwilling to approve your request on the grounds that correspondence in regard to the balances - all of which contain some overdue items -might give rise to demands on the part of the creditors for immediate payment of the overdue items-might give rise to demands on the part of the creditors for immediate payment of the overdue items and thereby embarrass Sylvan Company.
Given these circumstances, what alternative procedure would you adopt in an effort to satisfy yourself that the accounting records show the correct amounts payable to these creditors?© BrainMass Inc. brainmass.com June 3, 2020, 8:10 pm ad1c9bdddf
If there are substantial amounts outstanding at the close of the period and 75% of payables is owed to six creditors the best way is to call the creditors and check the balances with the creditors.
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