Auditors may use positive and/or negative forms of confirmation requests. Of the

Question

Auditors may use positive and/or negative forms of confirmation requests. Of the following, which combination is it most likely that the auditors will use?

a. The positive form for receivables and the negative form for payables

b. The positive form for small balances and the negative form for the large balances

c. The positive form for accounts in dispute and the negative form for accounts not in dispute

d. The positive form when controls related to receivables are satisfactory and the negative form when controls related to receivables are unsatisfactory

Explanation / Answer

Option c is correct

c. The positive form for accounts in dispute and the negative form for accounts not in dispute

Explanation:

Confirmation represent written evidences received directly by the auditor from an independent third party verifying the accuracy of requested information.

Accounts may be confirmed by using the positive form and negative form.

With the positive form, the respondent is asked to reply directly to the auditor, stating whether the balance as indicated on the request is correct or , if it's is incorrect, to indicate the correct balance and any possible explanation for the difference. These forms is used when accounts in dispute.

With the negative form, the respondent is asked to reply only if the balance, as stated on the requests, is not agreement with the records . These are used for those accounts , which are not in dispute.

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