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

Question

Quizplus · Accepted Answer

Negative confirmations only provide evidence if the recipient reports any discrepancies in the account information. Therefore, nonrespondents cannot be assumed to have verified their account information. In contrast, positive confirmations require a response confirming the accuracy of the account information, providing stronger evidence of reliability.

Negative Confirmations of Accounts Receivable Are Less Effective Than Positive