Chapter 4, Problem 4.12DMP

The following statements relate to nature of positive and negative confirmation requests. Which statement is true? * a. In positive confirmation, the customer is requested to reply directly to the client stating whether the balance appearing in the reply portion of the confirmation request is correct or not, and if not, to indicate details of difference. b. In a negative confirmation, the customer is asked to sign a confirmation form showing the account balance and return it in a stamped, addressed enveloped that is enclosed C. A positive confirmation request seeks a response from the debtor as to whether or not the balance is correct, and requests payment of the amount d. In negative confirmation, the debtor is requested to reply only if he disagrees with the indicated balance and to note details of the disagreement. e. None of the abovel

Which item regarding an Emphasis of Matter paragraph is true? a. The auditor will use the E of M to restrict distribution of the audit report. b. The auditor will use the E of M when the client has corrected an error in the previous financial statements. c. An E of M will be used when a material error exists in the current financial statements. d. The E of M paragraph is usually located immediately before the opinion paragraph. e. The E of M paragraph would be used to discuss a client's change in the method to estimate bad debts.

This is a process of evaluating the effectiveness of a client's internal controls in preventing or detecting material misstatements in the financial statements is called __________________ (answer in All CAPS)