For which type of receivable confirmations would auditors generally NOT follow up if a customer does not reply?
A. Negative confirmation
B. Invoice confirmation
C. Blank confirmation
D. Positive confirmation
The negative form requests the recipient to respond only if he or she disagrees with the information stated on the request..
Answer : Option A
For which type of receivable confirmations would auditors generally NOT follow up if a customer does...
Confirmation of accounts receivable is presumptively mandatory audit procedure. In performing this procedure, auditors use positive confirmation requests or negative confirmation requests or a combination of both. Which confirmation provides auditors with more accurate assurance, and why? (2 marks) B. Describe two conditions which should exist for the auditors to use the negative form of request. (4 marks) C. If a response is not received to an initial positive confirmation request, describe two actions that should be taken by the...
1. Negative confirmations are generally a more effective way of obtaining audit evidence compared to positive confirmations as auditors don’t have to wait to receive the confirmation or perform alternate procedures. A. True B. False 2. As it relates to the search for unrecorded liabilities audit procedure, circle all that apply. Most relevant assertion: (i) Completeness (ii) Existence (iii) Occurrence Other: (iv) Involves selecting a sample of liabilities recorded in the general ledger and checking to see subsequent cash payment...
06-10 You are the audit supervisor of Hasel Co, which is a manufacturing company. You are currently planning the audit of trade receivables for the year ended 31 December 2008. At 31 December, Hasel's trade receivables balance was $6.500.000. Hasel Co has more than 600 customers, including nine customers owing more than $250.000 each. Tests of control revealed weaknesses in Hasel's internal control over sales and trade receivables. In prior year audits, confirmations revealed misstatements in several customers' account balances....
In auditing accounts receivable, the “negative” form of confirmation request most likely would be used when a. Accounts receivable consist of a number of accounts with large customer balances. b. Control Risk and Inherent Risk are assessed to be High. c. Recipients are likely to return positive confirmation requests without verifying the accuracy of the information. d. The auditor is not aware of circumstances or conditions that would cause recipients of negative confirmation...
Evaluate and discuss the following statement: "In many audits in which accounts receivable is material, the requirements of confirming customer balances is a waste of time and would not be performed by competent auditors if it were not required by auditing standards. When internal controls are excellent and there are a large number of small receivables from customers who do not recognize the functions of confirmation, it is a meaningless procedure. Examples include well-run utilities and retail stores. In these...
Case Study question in Auditing You are the audit supervisor of Hasel Co, which is a manufacturing company. You are currently planning the audit of trade receivables for the year ended 31 December 20x8. At 31 December, Hasel’s trade receivables balance was $6.500.000. Hasel Co has more than 600 customers, including nine customers owing more than $250.000 each. Tests of control revealed weaknesses in Hasel’s internal control over sales and trade receivables. In prior year audits, confirmations revealed misstatements in...
thanks in advance. You are the audit supervisor of Hasel Co, which is a manufacturing company. You are currently planning the audit of trade receivables for the year ended 31 December 20x8. At 31 December, Hasel’s trade receivables balance was $6.500.000. Hasel Co has more than 600 customers, including nine customers owing more than $250.000 each. Tests of control revealed weaknesses in Hasel’s internal control over sales and trade receivables. In prior year audits, confirmations revealed misstatements in several customers’...
1. Auditors often follow a "cycle" approach to the gathering of evidence. Of the following accounts, which typically would NOT be part of the sales cycle? a. Accounts receivable b. Allowance for doubtful accounts c. Inventory d. Sales returns and allowances e. None of the above 2. The assertion COMPLETENESS involves a. Overstatement. b. Ownership. c. Professional Skepticism. d. Understatement. 3. To be appropriate, evidence should be relevant and reliable. Under...
Advanced Auditing Chapter 6: Professional Simulation – You will find this assignment at the end of Chapter 6 Assume that you have just been promoted to the position of in-charge accountant on the audit of Lancer Corporation, which manufactures and wholesalers consumer products. Lancer’s customer base is represented by about 10% of the customers that represent 65% of sales and a very large number of smaller retailers that make up the other 35% of the company’s sales. Last year Baker...
Part A: You are the lead auditor for the Zimmer Tree Company, Inc. in Milford, CT. The company has a June 30thyear end, and the audit team is discussing strategies for confirming year end accounts receivable. The composition of the accounts receivable is as follows: Total Accounts Receivable (beforeany Allowance for Doubtful Accounts): $ 4,584,600 Aged Composition: $ 3,667,680 Zero - 30 days 687,690 Thirty -60 days 183,390 Sixty - 90 Days 45,840 Over 90 Days $ 4,584,600 Of the...