Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What should an auditor do when not receiving replies to positive requests for confirmations?

1. Ignore the confirmations

2. Increase the detection risk assessment

3. Ask the client to contact customers to retrieve confirmations

4. Document it as a significant issue in the audit

The correct answer is: Ask the client to contact customers to retrieve confirmations

When an auditor does not receive replies to positive requests for confirmations, the appropriate course of action is for the auditor to ask the client to contact customers to retrieve confirmations. This approach is aimed at maintaining the integrity and thoroughness of the audit process. Confirmations are critical audit evidence and serve to verify the existence and accuracy of account balances and transactions. When positive confirmations go unanswered, it raises a concern about the reliability of the information. By requesting the client to reach out to the customers, the auditor is taking reasonable steps to pursue additional evidence, possibly prompting responses from customers who may have overlooked the initial confirmation request. This interaction can help reinforce the auditor's efforts to obtain the necessary confirmations directly. Additionally, it demonstrates the auditor's diligence in confirming balances and transactions, which is crucial for forming an opinion on the financial statements. In contrast, ignoring the confirmations would undermine the audit's credibility, while increasing detection risk without further investigation would not be adequately addressing potential concerns. Documenting this situation as a significant issue may be part of the audit process, but the immediate and constructive step is to actively seek to obtain the required confirmations through the client's assistance.