Negative confirmations of accounts receivable are less effective than positive confirmations of accounts receivable because
A)a majority of recipients usually lack the willingness to respond objectively.
B)some recipients may report incorrect balances that require extensive follow-up.
C)the auditor cannot infer that all nonrespondents have verified their account information.
D)negative confirmations do not produce evidential matter that is statistically quantifiable.

Question

Quizplus · Accepted Answer

Negative confirmations are considered less effective primarily because when recipients do not respond, auditors cannot assume that the lack of response indicates agreement with the stated account balance. This contrasts with positive confirmations, where non-response requires follow-up, thus providing more definitive evidence regarding the accuracy of accounts receivable balances.

Negative Confirmations of Accounts Receivable Are Less Effective Than Positive