A Summary of Research and Enforcement Release Evidence on Confirmation Use and Effectiveness
Document Type
Article
Publication Date
11-2008
Abstract
Confirmations are extensively used and are often perceived by practitioners to be one of the most persuasive forms of audit evidence. Yet academic research has found limitations that restrict confirmation effectiveness for many management assertions. In addition, a number of problems with false and forged confirmations are identified in Accounting and Auditing Enforcement Releases (AAERs). The Public Company Accounting Oversight Board (PCAOB) and the International Auditing and Assurance Standards Board (IAASB) have put confirmation evidence on their respective agendas. Academic research indicates that receivable confirmations can be effective evidence for the existence assertion. Low response rates, as well as respondent errors and directional bias in detecting errors, are key barriers to confirmation effectiveness. Our review of AAERs identified failure to authenticate responses, collusion between auditee management and customers, and concealed side agreements and special terms as specific problem areas. We also identify a number of research questions for future research.
Publication Title
Auditing: A journal of practice and theory
Repository Citation
Caster, Paul; Elder, Randal J.; and Janvrin, Diane J., "A Summary of Research and Enforcement Release Evidence on Confirmation Use and Effectiveness" (2008). Business Faculty Publications. 123.
https://digitalcommons.fairfield.edu/business-facultypubs/123
Published Citation
Caster, Paul, Randy J. Elder and Diane J. Janvrin. “A Summary of Research and Enforcement Release Evidence on Confirmation Use and Effectiveness” Auditing: A Journal of Practice and Theory (November 2008), pp. 253 – 279. http://dx.doi.org/10.2308/aud.2008.27.2.253
DOI
10.2308/aud.2008.27.2.253
Comments
Copyright 2008 American Accounting Association
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