In Auditing Accounts Receivable, the Negative Form of Confirmation Request

question 64

Multiple Choice

In auditing accounts receivable, the negative form of confirmation request most likely would be used when

• A) Recipients are likely to return positive confirmation requests without verifying the accuracy of the information.
• B) The combined assessed level of inherent and control risk relative to accounts receivable is low.
• C) A small number of accounts receivable are involved but a relatively large number of errors are expected.
• D) The auditor performs a dual purpose test that assesses control risk and obtains substantive evidence.

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Definitions:

Traditional Model

A conventional framework or approach often based on historical methods or practices in various fields such as economics or management.

Information Costs

The costs incurred in obtaining, processing, and transmitting data necessary for business operations.

Processing Costs

Expenses associated with the operations needed to transform raw materials into finished goods, including labor, equipment, and overhead costs.

Omni-Channel Retail

a retail strategy that integrates various channels such as physical stores, online platforms, and mobile apps, to provide a seamless customer shopping experience.