When a customer fails to reply to a confirmation and the auditor is unable to obtain other evidence about the existence of the receivable, _______.
A)the auditor must conclude that these balances are 100% misstatements and project the misstatements on the remaining portion of the population
B)the auditor must conclude that these balances are 50% misstatements and project the misstatements on the remaining portion of the population
C)the auditor must conclude that these balances are 100% misstatements and project the misstatements on the remaining portion of the sample
D)the auditor should notify management of the auditor's intention to withdraw from the engagement

Question

Quizplus · Accepted Answer

When a customer fails to reply to a confirmation and the auditor cannot obtain other evidence about the existence of the receivable, the auditor may need to consider these balances as potential misstatements. However, the specific action, such as concluding these balances are 100% misstatements and projecting this on the remaining population or sample, depends on the auditor's professional judgment and the specific circumstances of the audit. The given options are somewhat extreme and simplified, but in practice, auditors would assess the situation based on the risk of material misstatement, the nature of the receivables, and the availability of alternative audit evidence.

When a Customer Fails to Reply to a Confirmation and the Auditor