In the Audit of Accounts Receivable, the Negative Form of Confirmation

question 41

Multiple Choice

In the audit of accounts receivable, the negative form of confirmation request is most likely to 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 is 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:

SS(Total)

The total sum of squares in statistical analysis, a measure of the total variability within a dataset.

F-test

A statistical test used to compare two population variances and determine if they are significantly different.

T-test

A statistical analysis method that contrasts the average values of two groups to ascertain if their difference is statistically significant.

Analysis of Variance (ANOVA)

A statistical method used to compare the means of three or more samples to find out if at least one of the sample means is different from the others.