In auditing accounts receivable the negative form of confirmation request most likely would 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.

Question

Quizplus · Accepted Answer

The negative form of confirmation request is typically used when the risk of material misstatement is low (i.e., when inherent and control risks are low), because it is less efficient than positive confirmation (where recipients are asked to respond whether they agree or disagree with the information). Negative confirmation only asks recipients to respond if they disagree with the information provided. This approach is considered sufficient when the likelihood of errors or fraud in accounts receivable is assessed to be low.

In Auditing Accounts Receivable the Negative Form of Confirmation Request