Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because:

Question

Quizplus · Accepted Answer

Choice "D" is correct. The documents available to support accounts payable balances come from external sources, which makes them more reliable. Choice "A" is incorrect. Confirmation of accounts payable is not a duplication of cutoff tests. Cutoff testing addresses questions about proper period (allocation) while confirmation of accounts payable balances generally tests for understated balances. Choice "B" is incorrect. If liabilities are not paid before the audit is completed, accounts payable confirmations would be more important, since there would be less other evidence supporting the liability. Choice "C" is incorrect. Legal action usually takes a long time and correspondence with an attorney may not disclose all nonpayment problems. (Notice the all-inclusive word "all," usually the tip-off to a wrong answer.)

Auditor Confirmation of Accounts Payable Balances at the Balance Sheet