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The negative request form of accounts receivable confrimation nay be used when the
*Combined Assessed Level of Indherent and Control Risk is-LOW
*Number of Small Balances Is- Many
*Consideration by the Receipient Is-Likely
In confirming accounts receivable, an auditor decided to confirm customers' account balances rather than individual invoices. Which of the following most likely will be included with the client's confirmation letter?
A client-prepared statement of account showing the details of the customer's account balance.
Which of the following statements will an auditor most likely add to the negative form of confirmations of accounts receivable to encourage timely consideration by the recipient?
If you do not report any differences withing 15 days, it will be assumed that this statement is correct.
Auditing standards define a confirmation as "the process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions." Two assertions for which confirmation of accounts receivable balances provides primary evidence are
Rights and obligations and existence.
Auditors may use positive or negative forms of confirmation requests for accounts receivable. An auditor most likely will use
A combination of the two forms, with the positive form used for large balances and the negative form for the small balances.
In the confrirmation of accounts receivable, the auditor will most likely
Request confirmation of a sample of the inactive accounts
Negative confirmation of accounts receivable is less effective than positive confirmation of accounts receivable because
the auditor cannot infer that all nonrespondents have verified their account information
To reduce the risks associated with accepting fax responses to requests for confirmations of accounts receivable, an auditor most likely would
Verify the sources and contents of the faxes in telephone calls to the senders.
An auditor confirms a representative number of open accounts receivable as of December 31 and investigates respondents' exceptions and comments. By this procedure, the auditor is most likely to learn of which of the following?
One of the cashiers has been covering a personal embezzlement by lapping
During the process of confirming receivables aqs of December 31, Year 1 , a positive confirmation was returnbed indicating the "balance owed as of December 31 was paid on January 9. Year 2." The auditor would most likely
Verify that the amount was received.
Confirmation of accounts receivable is a generally accepted auditing procedure. The presumption that an auditor will confirm accounts receivable is not overcome if
The combined assessed level of inherent and control risk is high.
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