- What is an audit confirmation request?
- What are the circumstances under which confirmation of accounts receivable is not required?
- What is a negative confirmation?
- How do bank confirmation differ from positive confirmation of accounts receivable?
- How do you test the completeness of accounts receivable?
- What is a positive confirmation request?
- What is a blank confirmation?
- What are the primary assertions related to cash?
- Are bank confirmations required for an audit?
- What are the advantages of using a third party to send confirmations electronically?
- What are three of the characteristics of a reliable confirmation?
- What is the primary purpose of a bank confirmation?
- What is a bank confirmation?
- What are the characteristics of a confirmation?
- What is meant by alternative procedures in the confirmation of accounts receivable?
What is an audit confirmation request?
Audit confirmations are used when: Auditors often send paper or electronic requests to customers to verify accounts receivable and to other financial institutions to confirm outstanding promissory notes..
What are the circumstances under which confirmation of accounts receivable is not required?
RECEIVABLE CONFIRMATIONS ARE NOT ALWAYS required if accounts receivable are immaterial, the use of confirmations would be ineffective or combined inherent risk and control risk are low and analytics or other substantive tests would detect misstatements.
What is a negative confirmation?
Negative confirmation is a letter or document requesting that the recipient should only respond to the sender if there were an issue with the contents of the message or the recipient wanted to opt out of the event the letter had addressed.
How do bank confirmation differ from positive confirmation of accounts receivable?
Bank confirmations should be requested for all bank accounts, but positive confirmations of accounts receivable are normally requested only for a sample of accounts. If bank confirmations are not returned, they must be pursued until the auditor is satisfied as to what the requested information is.
How do you test the completeness of accounts receivable?
Here are some of the accounts receivable audit procedures that they may follow:Trace receivable report to general ledger. … Calculate the receivable report total. … Investigate reconciling items. … Test invoices listed in receivable report. … Match invoices to shipping log. … Confirm accounts receivable. … Review cash receipts.More items…•
What is a positive confirmation request?
What Is Positive Confirmation? Positive confirmation is an auditing inquiry that requires the customer to respond, confirming the accuracy of an item. Positive confirmation requires proof of accuracy by affirming that the original information was correct or by providing the correct information if incorrect.
What is a blank confirmation?
Term. blank confirmation form. Definition. a letter, addressed to the debtor, requesting the recipient to fill in the amount of the accounts receivable balance; it is considered positive confirmation. Term.
What are the primary assertions related to cash?
The primary relevant cash assertions are:Existence.Completeness.Rights.Accuracy.Cutoff.
Are bank confirmations required for an audit?
(1)For cash balances, there is no requirement shown in the auditing standards which means confirmation in audit of cash balances is not a must. But in fact, it is performed in most audits. (2)As for accounting receivables balances, it is required by the auditing standards to use confirmations.
What are the advantages of using a third party to send confirmations electronically?
The authors discuss the advantage of using a third-party for confirmations to increase reliability by stating, “The reliability of third-party evidence (e.g., bank statements) is enhanced when it is obtained from a knowledgeable, but unbiased, respondent who is outside the company under audit.
What are three of the characteristics of a reliable confirmation?
Case 9.4 – Bud’s Big Blue Manufacturing  The four factors and auditor should consider when evaluating the results of confirmation procedures are: • the reliability of the confirmations and alternative procedures • the nature of any exceptions, including the implications, both quantitative and qualitative, of those …
What is the primary purpose of a bank confirmation?
ANSWER 1 Primary purpose of bank confirmation is to verify the actual cash balance as per bank records. The auditor’s confirm the balance in addition to agreeing the year- end bank balance to the bank statement is to verify reconciling items on the client’s year-end bank reconciliation.
What is a bank confirmation?
Bank confirmation is the audit procedure that perform by auditor to test the existence, accuracy and the ownership of banks account and bank balance of entity. … Auditors draft the confirmation and the send to client review and get the confirmation signed.
What are the characteristics of a confirmation?
The four characteristics of the definition of a confirmation are:Receipt.Written or oral response.From independent third party.Requested by the auditor.
What is meant by alternative procedures in the confirmation of accounts receivable?
In the examination of accounts receivable, for example, alternative procedures may include examination of subsequent cash receipts (including matching such receipts with the actual items being paid), shipping documents, or other client documentation to provide evidence for the existence assertion.