It may NOT be necessary for an auditor to confirm accounts receivable when:
A) accounts receivable are immaterial.
B) the auditor considers confirmations ineffective evidence because response rates will likely be inadequate or unreliable.
C) the combined level of inherent risk and control risk is low and other substantive evidence can be accumulated to provide sufficient evidence.
D) all of the above

Question

Quizplus · Accepted Answer

All of the above options can be reasons for the auditor to not confirm accounts receivable. If the accounts receivable balance is immaterial or the auditor considers confirmations to be ineffective, then confirmation may not be necessary. Additionally, if there is a low level of inherent and control risk and sufficient substantive evidence can be obtained through other means, confirmation may not be necessary.

It May NOT Be Necessary for an Auditor to Confirm