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

Question

Quizplus · Accepted Answer

Negative confirmations do not provide sufficient evidence because the auditor cannot infer that all nonrespondents have verified their account information. This is because some recipients may simply overlook or ignore the request, whereas others may not respond because they have identified discrepancies in their account that require further investigation. Consequently, negative confirmations are less effective than positive confirmations in terms of both reliability and efficiency.

Negative Confirmations of Accounts Receivable Are Less Effective Than Positive