Comparison of the negative and positive methods, Auditing

Comparison of the Negative and Positive Methods

Negative Method

According to this method of circularisation, the customer is asked to communicate only when he does not agree along with the balance. Effectively the customer is told that whether no reply is obtained from them then the auditor will include that the debtor is in agreement along with all the terms in the circular. The main drawback of this method is that whether the debtor does not obtain the circular, so he will not respond, and this could be misconstrued to mean such the debtor obtained the circular whenever in fact it was never considered and received. From this standpoint, this way is unreliable and should just be used when there is strong internal control.

Positive Method

According to the positive technique, the customer is asked to reply when he agrees the balance or not or is asked to provide the balance himself. This technique is used when there is weak internal control, suspicion of irregularities or items in dispute and several book-keeping errors.

Posted Date: 1/28/2013 12:23:20 AM | Location : United States







Related Discussions:- Comparison of the negative and positive methods, Assignment Help, Ask Question on Comparison of the negative and positive methods, Get Answer, Expert's Help, Comparison of the negative and positive methods Discussions

Write discussion on Comparison of the negative and positive methods
Your posts are moderated
Related Questions
Oversee commission staff to ensure individuals are properly trained and monitored. please provide me with some risks, controls and audit tests for the process above.

Cost and Authorization - Auditing Process The cost of building and land acquired while the year should be vouched to suitable documentation.These are contract of sale, surveyo

IAS 37 Provisions, Contingent Assets and Contingent Liabilities IAS 37 was mattered in order to deal along with the subjective area of provision and to prevent the requiremen

Analyse the ratios in conjunction with the additional information and identify from your analysis, implications for the audit and any particular audit steps that need to be underta

example of it security policies in Hardware

With internal audit we always require to be careful of any manipulations within the company itself. Errors & frauds within the company cannot be denied /overlooked at any cost.

#what are the procedures of conducting audit for the first time#

Objectivity - External Auditor Report Many accounting figures are subjective and contain substantial terms of subjective judgment.  Many more business transactions have financ

Related Party Transactions Related party transactions-a transfer of obligations or resources among related parties, regardless of whereas a price is charged. A party is rel

Q. What do you understand by Yellow Book? Yellow Book - Written by GENERAL ACCOUNTABILITY OFFICE, yellow book sets forth standards to be followed in auditing FINANCIAL STATEMEN