Confirmation of accounts receivable is presumptively a mandatory audit procedure. For example in the examination of demand.
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Of the following which combination is it most likely that the auditors will use.
. Of the following which combination is it most likely that the auditors will use. However in this type of confirmation we require the recipients to respond only if they dont agree with the indicated balances stated in the. The auditor should consider performing other substantive procedures to supplement the use of negative confirmations21.
The positive form for accounts in dispute and the negative form for. Accordingly the auditor shall not use negative confirmation requests as the sole substantive audit procedure to address an assessed risk of material misstatement at the assertion level unless all of the following are present. Auditors may use positive andor negative forms of confirmation requests for accounts receivable.
Select all applicable answer choices. The positive form for receivables and the negative form for payables B. The cost-per-response is excessively high.
Recipients are likely to feel that in reality the confirmation is a subtle request for payment. There is no way of knowing if the intended recipients received them. Combined inherent and control risks are assessed low.
Like positive confirmation we perform negative confirmation by using formal letters or documents to request the response from the recipients. The audit approach needs to include tests of controls substantive analytical procedures and tests of details. In the confirmation of accounts receivable the auditor would most likely.
Negative confirmation requests may generate responses indicating misstatements and are more likely to do so if the auditor sends a large number of negative confirmation requests and such misstatements are widespread. Follow-Up on Nonresponses If a positive confirmations are not returned by the customer auditing standards require follow-up procedures. Identify whether the following tests are tests of controls substantive analytical procedures tests of details of transactions or tests of details of account balances1 Select a sample of customer receivables and send positive confirmations to each customer2 Examine monthly bank reconciliations for the internal auditors initials indicating internal verification and review of the.
Risk of material misstatement is low and internal controls are effective Population of items subject to negative confirmation procedures. The letter asks the customers to respond to the auditor only if they find a discrepancy between their records and the information about the client companys financial records that are supplied by the auditor. A combination of the two forms with the positive form used for large balances and the negative form for the small balances.
An auditor most likely will use The positive form to confirm all balances regardless of size. Peer reviewers often discover that auditors inappropriately select negative confirmation requests. Require that confirmation requests be sent as soon as possible after fiscal year-end.
Auditors in practice commonly use negative confirmations. Which of the following statements about the planned audit approach is true for the revenue cycle. 31 the auditor use negative confirmation requests as the sole substantive audit procedure to address an assessed risk of material misstatements at the assertion level if a the auditor has assessed the risk of material misstatement as high and has obtained sufficient appropriate sudit evidence regarding the operating effectiveness of controls.
Negative confirmation requests may be used to reduce audit risk to an acceptable level when a the combined assessed level of inherent and control risk is low b a large num- ber of small balances is involved and c the auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration. The positive form for small balances and the negative form for large balances. Of the following which combination is it most likely that the auditors will use.
Negative confirmation requests may be used to reduce audit risk to an acceptable level when a the combined assessed level of inherent and control risk is low b a large number of small balances is involved and c the auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration. Auditors have to decide whether they can use negative accounts receivable requests. Negative confirmation letters are often used in the financial services industry including accountants wanting to verify a clients financial.
Negative confirmation is an audit procedure that we perform to confirm the clients balances. Auditors may use positive andor negative forms of confirmation requests. Auditors may use positive andor negative forms of confirmation requests for accounts receivable.
Which of the following is the best argument against the use of negative accounts receivable confirmation requests. In performing this procedure auditors use positive confirmation requests or negative confirmation requests or a combination of both Auditors may use positive andor negative forms of confirmation requests for accounts receivable. The positive form for small balances and the negative form for the large balances.
Auditors may use positive andor negative forms of confirmation requests. A negative confirmation is a document issued by an auditor to the customers of a client company. Auditors must use positive confirmations unless all of the following conditions are met.
The positive form for receivables and the negative form for payables. During a negative confirmation request a business may be asked to confirm that an account balance is listed at a specific amount such as 100000. Require confirmation of all receivables from agencies of the federal government.
The positive form for small balances and the negative form for the large balances C. Has assessed the risk of material misstatement as low. The auditor shall not use negative confirmation requests as the sole substantive audit procedure to address an assessed risk of material misstatement at the assertion level unless What of the following criteria are present.
The positive form used for large balances and the negative form for the small balances. Negative Confirmation is common used practically for audits of hospitals retail stores banks and other industries in which the receivables are due from the general public. If the current account balance is 100000 no.
The positive form for accounts in dispute and the negative form for. Send negative confirmations when the assessed risk of material misstatement is high.
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