Returns of Positive Confirmation Requests for Accounts Receivable Were Very

question 109

Multiple Choice

Returns of positive confirmation requests for accounts receivable were very poor. As an alternative procedure, the auditor decided to check subsequent collections. The auditor had satisfied himself that the client satisfactorily listed the customer name next to each cheque listed on the deposit slip; hence, he decided that for each customer for which a confirmation was not received that he would add all amounts shown for that customer on each validated deposit slip for the two months following the balance sheet date. The major fallacy in the auditor's procedure is that:

• A) checking of subsequent collections is not an accepted alternative auditing procedure for confirmation of accounts receivable.
• B) the deposit slip would not be received directly by the auditor as a confirmation would be.
• C) by looking only at the deposit slip the auditor would not know if the payment was for the receivable at the balance sheet date or a subsequent transaction.
• D) a customer may not have made a payment during the two- month period.

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