Confirmation of accounts receivable is a generally accepted auditing procedure. The presumption is that an auditor will request confirmation of accounts receivable. Confirmation is necessary when
a. Based on prior years' audit experience, response rates will be inadequate
b. Based on experience with similar engagements, responses are expected to be unreliable
c. The combined assessed level of inherent and control risk is high
d. The accounts receivable are immaterial
Ans: c. The combined assessed level of inherent and control risk is high
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In an efficient capital market
A) security prices fully reflect the knowledge and expectations of all investors at a particular point in time. B) investors and financial managers have no reason to believe the securities are not priced at or near their true value. C) prices of securities adjust as new information becomes available to the market. D) All of the above are true.
If demand falls by 1 percent when price is increased by 2 percent, then ________
A) elasticity is -1/2 B) demand is inelastic C) demand is elastic D) buyers are not price sensitive E) A and B