It May NOT Be Necessary for an Auditor to Confirm

question 93

Multiple Choice

It may NOT be necessary for an auditor to confirm accounts receivable when:

• A) accounts receivable are immaterial.
• B) the auditor considers confirmations ineffective evidence because response rates will likely be inadequate or unreliable.
• C) the combined level of inherent risk and control risk is low and other substantive evidence can be accumulated to provide sufficient evidence.
• D) all of the above

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Definitions:

Equilibrium Price

The price at which the market is in equilibrium, that is, the quantity of a good or service demanded equals the quantity of that good or service supplied; also referred to as the market-clearing price.

Import Quota

A government-imposed limit on the quantity of a certain good that can be imported into a country, used to protect domestic producers.

Equilibrium Price

The price at which the quantity of a good or service demanded equals the quantity supplied, leading to market stability.

Coffee

A beverage made from brewed coffee beans, widely consumed globally and subject to market dynamics affecting its price and supply.