If the Auditor Decides Not to Confirm Accounts Receivable That

question 48

Multiple Choice

If the auditor decides not to confirm accounts receivable that are material, the auditor should

• A) always use alternative procedures to audit the accounts receivable.
• B) include copies of customer statements in the audit files.
• C) document the reasons for such a decision in the audit files.
• D) include copies of customer sales invoices in the audit files.

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Definitions:

Default Risk

The risk that a borrower fails to make the promised payments on their debt obligations.

Organizational Reliance

The dependence of a business on certain key factors such as technologies, processes, leadership, or external relationships that can significantly impact its operations and success.

Covenant Provisions

Conditions set by lenders in a loan or bond agreement that the borrower must abide by, aimed at protecting the lender's interests.

Credit Risks

This is the risk that a borrower will default on any type of debt by failing to make required payments, impacting lenders and investors.