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QUESTION THREE A practice that is becoming very common in the verification of receivables is to circularize the debtors or obtain direct confirmation. Required: Explain

QUESTION THREE

A practice that is becoming very common in the verification of receivables is to circularize the debtors or obtain direct confirmation.

Required:

  1. Explain three benefits that would accrue to an auditor from carrying out debtors circularization. (6 marks)
  2. Identify two types of errors and two types of frauds that may be revealed or detected through the circularization of debtors. (4 marks)
  3. Describe the criteria used when selecting the debtors who should be circularized. (6 marks)
  4. Highlight two limitations of using debtors circularization as an audit

procedure. (4 marks)

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