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Audit standards indicate that there is a presumption that auditors will confirm accounts receivable unless the balance is immaterial, confirmations are deemed ineffective, or the auditors' assessment of risk is low and other procedures will achieve the same objective. However, these instances are considered few and far between and current trends in auditing indicate that there is an expectation that accounts receivable will be confirmed. Auditors may stratify the population, use haphazard or judgmental sampling, and send positive or negative requests.
1. Should Jenner and Jenner CPAs send accounts receivable confirmations?
2. How should they mitigate the risk associated with both very large and very small balances?
3. Because so many customer balances consists of multiple invoices, what could they do to eliminate unnecessary reconciliation?
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