Case 6-29The accounts payable audit revealed numerous deficiencies in the sufficiency and appropriateness of the evidence collected, with respect to department stores. Before analyzing each account, it should be noted that the audit evidence acquired by an auditor must be sufficiently compelling to permit any competent auditor to believe that no material misstatement exists. As Grande Stores grows, the auditor must adjust their audit risk because the risk of fraud and errors may now be higher. Advertising Credits McClureThe first problem poses many gaps in the audit process. For starters, it's not enough to take a sample of just four test documents when there are more than 1,100 vendors. If an error could be detected in only four test documents, the auditor should have increased their sample size to ensure that no actual material misstatement existed. Auditors say the amount was not significant, but because the sample size was so small, they could not make an accurate judgment. The second problem occurred when the auditor accepted telephone confirmations and internally generated documents such as cash receipts to confirm that the sample was correct. This evidence should not be accepted because its reliability is flawed. The best type of confirmation the auditor could have received would have been written confirmations from external parties. Given this situation, the auditor should have used his professional judgment to determine whether the evidence received was sufficiently compelling to enable him to make an accurate determination on the accuracy of the accounts payable. With such a small sample, the auditor assumes too much audit risk, and ...... middle of document ...... done to show gratitude to the accountants who provided review services for the company since its date of incorporation. Since it is the responsibility of the PA firm to perform audits, the objective of a public accountant is to adhere to NCA 200, according to which its objectives are to provide reasonable assurance that the financial statements contain no no anomalies, to consider the possibility of fraud or error and to communicate the conclusions in accordance with Canadian Auditing Standards. Public accountants are only required to provide a reasonable level of assurance when auditing financial statements. Users of financial statements may vary. They may be shareholders, creditors or officers, but the sole responsibility of the shareholder is to provide reasonable assurance that the financial statements present fairly and in accordance with certain criteria such as GAAP..