. An external confirmation constitutes critical audit evidence to verify accounts receivable and notes receivable. Note that while confirmations provide evidence about existence, they provide only limited evidence of proper valuation.

Given the importance of the confirmation process in verifying accounts receivable and notes receivable, lets dive a bit deeper into this area.

Consider the following questions:

• What is an audit confirmation request?
• What characteristics should an audit confirmation response possess if a CPA firm is to consider it to be valid evidence?
• Distinguish between a positive confirmation request and a negative confirmation request in the auditors examination of accounts receivable?