When IT Gets Tough III

Question 1

WHY are Negative confirmations of accounts receivable less effective than positive confirmations of accounts receivable?

Answer 1

Because the auditor cannot infer that all non-respondents have verified their account information

E.g. Just because the debtor doe NOT reply does NOT mean this is explicit evidence the intended parties received their requests and verified the information

With a Positive Confirmation the confirming party must respond regardless of whether the concur with the balance; Hence this is why the Negative confirmation of accounts receivable less effective