Debtor conformation ?

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This topic contains 11 replies, has 5 voices, and was last updated by avatar christine71 1 year, 10 months ago. This post has been viewed 135 times

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    salman2222
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    Can any one define the Positive Conformation and Negative Conformation?

    Is Debtor should response in both conditions?

    Preference is given to ?


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    christine71
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    Positiive confirmation got two types, 1st details are included in the confirmation request. Debtor is asked to agree or disagree with the information provide. if debtors disagree, he is asked to provide explanation of why he is disagrees in the form of reconciling items.
    2nd types, details are not included in the confirmation request. Debtors is asked to fill in the amt or furnish information.
    Negative confirmation , this is a request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request.


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    Neeta
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    • Topics: 2
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    The positive confirmation request is preferable as it is designed to encourage definite replies from those contacted.


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    salman2222
    Participant
    • Topics: 13
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    If in the case debtor not reply the auditor about the balance conformation ? what other audit procedure we will apply in checking the accuracy of balance ?


    Avatar of silentdarkness99
    silentdarkness99
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    • Topics: 1
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    Positive circularisation is in common practice, but negative only exists theoretically. Negative circularisation cannot support court evidence.


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    Neeta
    Participant
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    Have to follow up with the debtors, phone them but permission should be taken from the mgt


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    salman2222
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    @nikky1611 said:
    Have to follow up with the debtors, phone them but permission should be taken from the mgt

    we can trace the debtor balance by different way which is suitable for Firm..but we have to required permission from management..im right ??


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    cromwellk
    Participant
    • Topics: 1
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    Option left wil be Checking source documents whch legitimize e balance ie:
    1)customer sig on GDN
    2)Sales invoice tally wth gdn and rates agreed on sales order
    3)bank satements for al deposits or cheques by customer with attention on discounts
    4) Credit and Debit notes were with proper authorisation.

    Apart from e above since material misstatement is e key issure analytical proceedures culd stil b used.ie relationships of purchases to sales, then sales to credit sales. A picture from such info culd then give an impression of whether there is material mistatement as audit evidence gets gathered


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    salman2222
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    • Topics: 13
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    In above option your guide us the way of reconciling the debtor balance.if they dun’t reply.yes ?

    i want to know what if the Debtor did not reply our conformation letter,
    no reply deemed that debtor is agree with balance ?


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    cromwellk
    Participant
    • Topics: 1
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    Yes no reply implies agreement but remember the limitations of circularisation. To counter such, we check using e method i highlighted + analytical proceedures


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    salman2222
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    @christine71 said:
    Positiive confirmation got two types, 1st details are included in the confirmation request. Debtor is asked to agree or disagree with the information provide. if debtors disagree, he is asked to provide explanation of why he is disagrees in the form of reconciling items.
    2nd types, details are not included in the confirmation request. Debtors is asked to fill in the amt or furnish information.
    Negative confirmation , this is a request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request.

    In negative auditor are just requesting to reply directly to the auditor ? nthing els ?


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    christine71
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    • Topics: 17
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    This is the disadvantage when no response has been received to a negative confirmation request, the auditor dosen’t know for sure whether that means that confirming party has agreed to contents of the confirmation.

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