Question

When scheduling the audit work to be performed on an engagement, the auditors should consider confirming accounts receivable balances at an interim date if:

A. Subsequent collections are to be reviewed.
B. Internal control over receivables is good.
C. Negative confirmations are to be used.
D. There is a simultaneous examination of cash and accounts receivable.

Answer 1

The correct answer is letter "B": Internal control over receivables is good.

Step-by-step explanation:

Only in the case the internal control of an organization is well-established enough so those account receivables (AR) are paid according to the terms agreed between the organization and its debtors, auditors could consider the balance of the account receivables at a provisional date.