A positive confirmation is more reliable evidence than a negative confirmation because
A)the auditor has a document that can be used in court.
B)follow-up procedures can be performed if a response is not received from the debtor.
C)the debtor's lack of response indicates agreement with the stated balance.
D)fewer confirmations can be sent out.

Question

Quizplus · Accepted Answer

A positive confirmation provides direct evidence that the debtor agrees with the stated balance, while a lack of response from the debtor in a negative confirmation may not necessarily indicate agreement with the balance. However, follow-up procedures can be performed if a response is not received from the debtor, which allows the auditor to gain further evidence and insight into the accuracy of the stated balance. Therefore, a positive confirmation is more reliable than a negative confirmation, but follow-up procedures can enhance the reliability of both types of confirmations. Options A, C, and D are not correct because they do not address the relative reliability of positive vs. negative confirmations.

A Positive Confirmation Is More Reliable Evidence Than a Negative