Final answer:
The correct statement about the auditor's use of confirmations is that a combination of positive and negative confirmation types can be used, with the positive typically for large balances and negative for small balances.
Step-by-step explanation:
Auditors may use positive and/or negative forms of confirmation requests for accounts receivable. The statement that is true regarding the auditor's use of confirmations is that a combination of the two confirmation types can be used, with the positive form used for large balances and the negative form used for small balances.
In auditing, a positive confirmation is a request for the recipient to reply whether they agree or disagree with the indicated balance. A negative confirmation, on the other hand, is a request where the recipient is asked to respond only if they disagree with the balance indicated. When control risk is assessed as low and the individual balances are large, positive confirmations are preferable as they provide higher assurance. However, when the balances are small and the risk of material misstatement is low, auditors may use negative confirmations.
The use of confirmation type is dependent on factors such as risk assessment, the nature of the receivables, the size of the balances, the cost-efficiency of the confirmation process, and any expected errors or fraud. Therefore, statement B is correct in suggesting that a combination of both types of confirmations can be used, based on the circumstances of the audit work.