Confirmation of accounts receivable balances is a generally accepted auditing procedure when it is reasonable and practical.

Required:

a. Describe the conditions that should exist for confirmations of receivables to be a reliable source of evidence.

b. What factors should the auditor consider in deciding whether to use positive or negative confirmations?

c. Under what circumstances might confirmation of receivables not be reasonable and practical?

d. Describe the alternative procedures auditors can use when confirmations are not returned by some customers. Which of these procedures are the most reliable?