If auditors consider confirmations of accounts receivable to be ineffective evidence because response rates will be inadequate or unreliable, they need not confirm accounts receivable.

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Auditors have the discretion to decide which audit procedures to use based on their professional judgment and assessment of the risks of material misstatement. If they believe that confirmations of accounts receivable would not be effective in providing sufficient and appropriate audit evidence, they can use alternative procedures, such as substantive analytical procedures, examination of supporting documentation, and observation of physical inventory counts. However, they should document the reasons for not using confirmations and consider the impact on their overall audit opinion.

If Auditors Consider Confirmations of Accounts Receivable to Be Ineffective