CAF-8 · Chapter 4 · Question 5 of 10
Under what condition is it appropriate for an auditor to use 'Negative Confirmations' for trade receivables?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) When the population comprises a large number of small, homogeneous balances and the assessed risk is low.
Explanation
Negative confirmations ask the recipient to reply only if they disagree. They provide less persuasive evidence and are only suitable when risk is low, balances are small, and exception rates are expected to be low.
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