Question

As part of his confirmations testing over accounts receivables, Shawn Hiwa did not receive responses to either his initial or second requests for several of DULL's customers. Assuming that Shaw used positive confirmations, which of the following would not be an appropriate alternative procedures for Shawn to use to gain assurance regarding these customers' accounts balances?

a. examination of controls over accounts receivable
b. examination of subsequent cash receipts
c. examination of shipping documentation
d. examination of other client documentation related to accounts receivable

Answer 1

The appropriate alternative procedure to gain assurance regarding the customers' accounts balances when using positive confirmations and not receiving responses to initial or second requests is the b) examination of subsequent cash receipts.

Step-by-step explanation:

The appropriate alternative procedure for Shawn Hiwa to gain assurance regarding the customers' accounts balances when using positive confirmations and not receiving responses to his initial or second requests would be an examination of subsequent cash receipts. This involves examining the cash receipts received from customers after the confirmation request to see if they match the accounts receivable balances. If there are cash receipts corresponding to the unresponsive customers, it provides evidence that the account balances are valid. This procedure is useful in situations where confirmations are not received or if the confirmation results are unreliable.