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characteristics of a reliable confirmation? (For this and other questions,
you may wish to refer relevant auditing standards).
[2] What does it mean to “maintain control” over the confirmation
requests and responses? What could go wrong if the auditor doesn’t
maintain control over the confirmation process?
[3] Complete the audit log provided on the next page for each of the
seven remaining confirmations. Consider whether each confirmation
provides sufficient, appropriate audit evidence, whether sufficient
alternative procedures have been performed for non-responses, and
whether additional procedures should be performed before concluding
that the confirmation provides evidence supporting the client’s account
balance. Be as precise and concise as possible.
[4] What is the difference between a positive and a negative
confirmation? What are the advantages and disadvantages of each type?
[5] Search the internet to identify a real-life situation where an auditor
apparently did not maintain sufficient control over the confirmation
process. Briefly describe the situation you found.
PROFESSIONAL JUDGMENT QUESTION
It is recommended that you read the Professional Judgment Introduction
found at the beginning of this book prior to responding to the following
question.
[6] After completing the confirmations review, your senior asks you to
assess the reasonableness of the allowance for bad debts. Think about
the anchoring tendency discussed in the Professional Judgment
Introduction. How could the anchoring tendency bias your
reasonableness assessment? What are some ways that you could mitigate
the possible effects of the anchoring tendency in assessing the
reasonableness of the allowance?
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