An auditor should normally perform alternative procedures to substantiate the existence of accounts receivable when:
A)no reply to a positive confirmation request is received.
B)no reply to a negative confirmation request is received.
C)collectability of the receivables is in doubt.
D)pledging of the receivables is probable.

Question

Quizplus · Accepted Answer

If a positive confirmation request is sent to the customer and no reply is received, it could indicate that the customer did not receive the request, did not respond or the receivables do not exist. Therefore, the auditor should perform alternative procedures to validate the existence of accounts receivable. In contrast, if no reply is received to a negative confirmation request, it is considered a reliable form of audit evidence, and no further procedures are required. Collectability and pledging of receivables are separate issues that may require additional procedures.

An Auditor Should Normally Perform Alternative Procedures to Substantiate the Existence