Forums › ACCA Forums › ACCA AA Audit and Assurance Forums › Debtor conformation ?
- This topic has 11 replies, 5 voices, and was last updated 12 years ago by christine71.
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- May 24, 2012 at 11:44 pm #52861
Can any one define the Positive Conformation and Negative Conformation?
Is Debtor should response in both conditions?
Preference is given to ?
May 25, 2012 at 4:09 am #98202Positiive 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.May 25, 2012 at 7:41 am #98203The positive confirmation request is preferable as it is designed to encourage definite replies from those contacted.
May 25, 2012 at 11:19 am #98204If 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 ?
May 25, 2012 at 11:35 am #98205Positive circularisation is in common practice, but negative only exists theoretically. Negative circularisation cannot support court evidence.
May 25, 2012 at 5:05 pm #98206Have to follow up with the debtors, phone them but permission should be taken from the mgt
May 25, 2012 at 6:36 pm #98207@nikky1611 said:
Have to follow up with the debtors, phone them but permission should be taken from the mgtwe can trace the debtor balance by different way which is suitable for Firm..but we have to required permission from management..im right ??
May 25, 2012 at 7:06 pm #98208AnonymousInactive- Topics: 0
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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
May 25, 2012 at 7:19 pm #98210In 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 ?May 26, 2012 at 10:11 am #98211AnonymousInactive- Topics: 0
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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
May 27, 2012 at 12:51 pm #98212@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 ?
May 28, 2012 at 1:43 am #98213This 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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