An auditor confirmed accounts receivable as of an interim date, and all confirmations were returned and appeared reasonable. Which of the following additional procedures most likely should be performed at year-end?

Question

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Choice "C" is correct. When auditing procedures are performed before year-end, additional procedures should be performed to extend the interim conclusions to year-end. Large balances would be tested by reviewing supporting evidence, and significant changes in the balance would also be investigated. Choice "A" is incorrect. The auditor would not send confirmations for all new customer balances, but instead would focus on those that appear material. Choice "B" is incorrect. The purpose of performing tests at interim is to minimize the amount of work that needs to be performed at year end, to improve efficiency. If confirmations were sent at interim, and the auditor was satisfied with the results of that testing, there would be no reason to send additional confirmations. Rather, interim conclusions would be extended by focusing on any material changes in the account, including new, large balances. Choice "D" is incorrect. Review of subsequent cash collections is a means of supporting a receivables balance when no confirmation response has been received. This procedure generally would not be performed as a means of extending interim conclusions to year-end.

An Auditor Confirmed Accounts Receivable as of an Interim Date