Skip to content

CA Final · Advanced Auditing, Assurance and Professional Ethics · Audit Evidence

Auditor Ishita is auditing Bharat Components Ltd. She concluded that a response to a positive confirmation request from the company's largest debtor is necessary to obtain sufficient appropriate audit evidence, because the balance is material and no other procedure can address the existence assertion. Despite follow-up, no reply is received. What must she do?

She must determine the implications for the audit and her opinion in accordance with SA 705 (Revised). Since a response was judged necessary, alternative procedures cannot supply the required evidence, so the missing confirmation may lead to a modified opinion.

  1. ARely on subsequent receipts and treat the matter as closed since alternative procedures are always enough
  2. BAccept the management's assurance on the balance and document it
  3. CDetermine the implications for the audit and the auditor's opinion in accordance with SA 705 (Revised)Correct
  4. DTreat the non-reply as proof of the balance being correct

Explanation

Where a response to a positive confirmation is necessary, alternative audit procedures will not provide the evidence required. If the confirmation is not obtained, the auditor determines the implications for the audit and opinion under SA 705 (Revised). Relying on alternatives or management assurance contradicts the determination already made.

Did you get it right without looking?

One question tells you little. A timed set on Audit Evidence shows your real accuracy, how long you take and where you lose marks.

Practise Audit EvidenceFree diagnostic mock

More Audit Evidence questions