Beltrand,a PA,is auditing the financial statements of a small rural municipality.The receivable balances represent residents' delinquent property taxes or receivables over the due date.The internal controls at the municipality are weak.To determine the existence of the accounts receivable balances at the balance sheet date,Beltrand would most likely
A)send positive confirmation requests.
B)send negative confirmation request.
C)examine evidence of subsequent cash receipts.
D)inspect the internal records such as copies of the tax invoices that were mailed to the residents.

Question

Quizplus · Accepted Answer

Since the internal controls are weak, sending positive confirmation requests to the residents who owe the property taxes would be the best option to determine the existence of the accounts receivable balances. Positive confirmation requests require the recipient to respond directly to the auditor, confirming or denying the accuracy of the balance. This method provides the most reliable evidence of the existence of the accounts receivable balances, as it involves direct communication with the debtor. Examining evidence of subsequent cash receipts and inspecting internal records would not provide as strong evidence of the existence of the accounts receivable balances. A negative confirmation request would not be appropriate in this case because it is less reliable and might not provide sufficient evidence of the existence of the balances.

Beltrand,a PA,is Auditing the Financial Statements of a Small Rural