Final answer:
The true statements regarding the use of confirmations in auditing are that positive receivable confirmations include the amount recorded for the customer to confirm, and there are two types of confirmations: negative and affirmative. Negative confirmations are less common and positive confirmations are considered to provide strong evidence and require follow-up on non-responses.
Step-by-step explanation:
The student question pertains to the use of confirmations in auditing. Within the context of auditing, confirmations are used to verify certain information with a third party. Addressing the statements provided by the student:
- When auditors send a positive receivable confirmation, they typically include the amount recorded in their client's records for each customer, which the customer then confirms or disputes. This statement is true.
- There are indeed two types of external confirmations, specifically negative and affirmative (or positive) confirmations. This statement is also true.
- Negative confirmations are less commonly used in practice compared to positive confirmations because they provide less persuasive evidence. They only request a response if the confirming party disagrees with the information provided.
- Contrary to the statement provided, positive confirmations are considered to provide stronger evidence in auditing. Auditors are expected to follow up on non-responses as this could indicate a potential material misstatement. Thus, the statement that positive confirmations provide inferior evidence is false.
In conclusion, confirmations are a vital part of the audit process and auditors must carefully consider the type of confirmation to use and how to follow up on responses or non-responses adequately to gather sufficient evidence.