In short
When a positive confirmation isn't returned, the auditor performs alternative procedures, such as examining cash received after year-end and the shipping documents and invoices supporting the balance.
Key takeaways
- Second requests are usually sent first.
- If a reply is essential to obtain enough evidence, alternative procedures won't do, and the auditor considers the effect on the opinion.
- If management refuses to allow a confirmation, the auditor asks why and evaluates the implications, including fraud risk.
Where it's tested
AUD: Evidence: Types & Procedures — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor selects recorded sales transactions from the sales journal and examines the related shipping documents and customer orders. This procedure primarily tests which assertion?