A) Explain what are positive and negative external confirmation requests?
(b) You are assigned to audit the trade receivable balance of a trading company. The company accountant has provided you the trade receivable balance report as at 31st March 2002. What information from this report would you require to prepare positive confirmation requests for the trade receivable balances as at 31 March 2002? Explain why the information is required.
(c) Explain what auditors can do in order to improve the response rate of receiving positive confirmation requests?
(a) A positive external confirmation request asks the respondent to reply to the auditors in all cases either by indicating the respondent's agreement with the given information, or by asking the respondent to fill in information.
A negative external confirmation request asks the respondent to reply to the auditors only in the event of disagreement with the information provided in the request.
(b) The information required ...
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