Question

1. Describe the use of and process of Accounts Receivable Confirmations
2. Describe what a Positive Confirmation is
3. Describe what a negative confirmation is

Answer 1

Answer:

1. Use of and process of Accounts Receivable Confirmations:

External confirmation may be defined as audit evidence obtained as direct written responses to the auditor from a third party in the paper, electronic, or another medium.

Use of and process of Accounts Receivable Confirmations:

The auditor may use external confirmation as audit evidence with respect to accounts receivable etc, to confirm their balance recorded in the books & credit sales made to them.

When using external confirmation procedures, the auditor shall maintain the control over external confirmation request, including,

• Determination of appropriate confirming party i.e. to whom confirmation needs to be sent i.e. selection of appropriate accounts receivable.
• Designing & confirming the request, including determining that requests are properly addressed ad contains return information.
• Sending the request, including follow-up request, were applicable to the confirming party such as accounts receivable, etc.

2. Positive Confirmation

A positive confirmation request is a request that the confirming party responds directly to the auditor indicating whether the confirming party agrees or disagree with the information in the request or providing the requested information.

2. Negative Confirmation:

The negative request refers to a request that the confirming party responds directly to the auditor only if the confirming are disagrees with the information provided in the request.