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to:Darlene wardlaw FROM: SUBJECT:CONFIRMATION REQUESTS DATE:OCTOBER 30, 2012 Two Forms of Confirmations We used both positive confirmations and negative confirmations. This is a required audit procedure by audit standards. Confirmations show existence and valuation of accounts and notes receivable. The positive confirmations are used to ask the customer to respond whether the balance is correct or incorrect. The negative confirmations ask for a response only if something is wrong with the balance. If no response is received, it is considered evidence that the account is stated fairly.
With the positive confirmations, we are trying to find information on account balances or specific invoices. We sent positive confirmations to Neutralizer, Mall-Wart, Run For Your Life Shoes, Paul Bunion Footwear, Sassy Shoes, and International Soccer Federation. We sent a negative confirmation to Tread. The ones that we sent a positive confirmation to, we were wondering about some discrepancies in the numbers and needed confirmation that payments were being made. The negative confirmation was sent with confidence that there were no errors. Therefore, we did not need a response if nothing was found.
We checked the numbers that we received from the confirmation and compared them to the aged trial balance for account receivable. The numbers matched up. Alternative Procedures Sometimes customers are not able to send a response. A reason for this could be that they are on a voucher system that lists payables by invoice instead of by vendor account. In a case like this, we have to perform alternative procedures. We could examine subsequent cash receipts. We could examine sales orders, invoices and shipping documents. We could also examine correspondence files for past due accounts.
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