Negative confirmation of accounts receivable is less effective than positive confirmation of accounts receivable because:
A)a majority of recipients usually lacks the willingness to respond objectively.
B)some recipients may report incorrect balances that require extensive follow up.
C)the auditor cannot infer that all nonrespondents have verified their account information.
D)negative confirmations do not produce evidential matter that is statistically quantifiable.

Question

Quizplus · Accepted Answer

Negative confirmation of accounts receivable is less effective than positive confirmation because the auditor cannot infer that all nonrespondents have verified their account information. This means that even if a recipient does not respond to a negative confirmation, the auditor cannot be sure that the information is correct. On the other hand, with positive confirmation, the recipient is specifically asked to confirm the balance, increasing the likelihood of accurate information being obtained.

Negative Confirmation of Accounts Receivable Is Less Effective Than Positive