Question

In the confirmation of accounts receivable, the auditor would most likely:

A) send negative confirmations when the assessed risk of material misstatement is high.
B) seek to obtain positive confirmations for at least 50% of the total dollar amount of the receivables.
C) require confirmation of all receivables from agencies of the federal government.
D) require that confirmation requests be sent as soon as possible after fiscal year-end.

Answer 1

In the confirmation of accounts receivable, the auditor would most likely require confirmation of all receivables from federal government agencies.

Step-by-step explanation:

In the confirmation of accounts receivable, the auditor would most likely require confirmation of all receivables from agencies of the federal government (Option C). This is because the federal government agencies are considered to have the lowest risk of defaulting on their payments, making their receivables less likely to be misstated. By requiring confirmation of all receivables from federal government agencies, the auditor can gather reliable evidence to support the accuracy of the account balances.

The other options in the question are not the most appropriate choices. Option A suggests sending negative confirmations when the risk of misstatement is high, but this is not common practice as it may not provide sufficient evidence of the accuracy of the receivables. Option B mentions seeking positive confirmations for a specific percentage of the receivables, which may not be a sufficient or representative sample. Option D suggests sending confirmation requests immediately after the fiscal year-end, but the timing of the confirmation requests depends on the organization's policies and requirements.