Question

When positive confirmations are used, auditing standards require alternative procedures for confirmations not returned by the customer. Which of the following would not be considered an alternative procedure?

A) Send a second confirmation request.
B) Examine subsequent cash receipts to determine if the receivable has been paid.
C) Examine shipping documents to verify that the merchandise was shipped.
D) Examine customer's purchase order and the duplicate sales invoice to determine that the merchandise was ordered

Answer 1

Alternative procedures in positive confirmations are required for unreturned confirmations in auditing. Examining shipping documents to verify shipment is not an alternative procedure for confirmations. The other options, sending a second confirmation request, examining subsequent cash receipts, and examining purchase orders and sales invoices, are considered alternative procedures.

Step-by-step explanation:

When positive confirmations are used in auditing, alternative procedures are required for unreturned confirmations. Alternative procedures should provide evidence about the existence and completeness of the receivables. Examining shipping documents to verify the shipment of merchandise (option C) would not be considered an alternative procedure as it does not provide direct evidence about the existence of receivables or their completeness. The other options, sending a second confirmation request (option A), examining subsequent cash receipts (option B), and examining purchase orders and sales invoices (option D), all provide direct evidence of the existence and completeness of receivables.