How Does the Auditor Gather Evidence Using the Confirmation Process

question 81

Multiple Choice

How does the auditor gather evidence using the confirmation process?

• A)The client selects a sample of customer balances from the year-end accounts receivable subsidiary ledger
• B)Each of the customers selected for confirmation will be sent a letter asking him to confirm the balance that he is owed by the audit client at year-end
• C)The auditor can choose to send either positive or negative confirmations
• D)Positive confirmations request the customer to return the confirmation directly to management if the balance is correct or incorrect
• E)Negative confirmations request the customer to return the confirmation directly to the auditor only if the balance is incorrect
• F)Both A and B
• G)Both B and C
• H)Both C and E

---

Definitions:

IFRS

International Financial Reporting Standards are a set of accounting standards developed by the International Accounting Standards Board (IASB) that serve as a global framework for preparing financial statements.

IASB

The International Accounting Standards Board, an independent group responsible for setting and enforcing global accounting standards known as International Financial Reporting Standards (IFRS).

Accepted Accounting Principles

Standards and conventions in accounting that provide guidelines for financial reporting, often referred to as Generally Accepted Accounting Principles (GAAP).

Inflationary Economies

Economies experiencing a sustained increase in the general price level of goods and services over a period of time.