Confirmation of accounts receivable provides some assurance that no lapping or other manipulation affecting accounts receivable is being carried on.

Question

Quizplus · Accepted Answer

Confirming accounts receivable with the customers provides external evidence that the recorded balances are accurate and that there is no manipulation or fraud taking place, such as lapping (the practice of using payments from one customer to conceal the theft of cash received from another customer). Therefore, confirmation of accounts receivable can provide some assurance that such manipulations are not occurring.

Confirmation of Accounts Receivable Provides Some Assurance That No Lapping