Anonymous

Testing Methods

COLLAPSE

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Please respond to the following:

• According to your textbook, to minimize the risk of material misstatement, auditors seek third-party verification of account balances by mailing customers their statements. Discuss the advantages of positive and negative confirmations, and ascertain whether or not email and oral confirmations are acceptable to increase customer response rates. Support your position.
• Discuss the key differences between substantive tests of transactions and substantive tests of balances. Next, identify at least two situations when an auditor should test account balances. Support your rationale with related examples of such circumstances.

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