Under which of the following circumstances would it be advisable for the auditor to confirm accounts payable with creditors?
A)Internal accounting control over accounts payable is adequate, and there is sufficient evidence on hand to minimize the risk of a material misstatement.
B)Confirmation response is expected to be favorable, and accounts payable balances are of immaterial amounts.
C)Creditor statements are not available and internal control over payables is unsatisfactory.
D)The majority of accounts payable balances are with associated companies.

Question

Quizplus · Accepted Answer

The auditor should confirm accounts payable with creditors if creditor statements are not available and if internal control over payables is unsatisfactory. This is because the risk of material misstatement is higher in such circumstances, and confirmation with creditors can provide reliable and independent evidence of the existence, ownership, and valuation of accounts payable balances. Confirmation is therefore a useful procedure for mitigating this risk and obtaining sufficient audit evidence. The other options do not typically warrant confirmation of accounts payable, as internal control, materiality, and related party transactions may mitigate the risk of material misstatement or reduce the need for confirmation.

Under Which of the Following Circumstances Would It Be Advisable