In response to an accounts receivable confirmation, a customer indicated that the invoice listed on the confirmation letter had been paid two months earlier. This may indicate that:
A.
The receivable was selected for confirmation in error.
The whole essence of confirmation was established through this confirmation, the question in the auditors mind should be that why is the debt still a part of the receivable list presented to the auditor if there is nothing fishy, normal procedure should require that paid debt should be expunged from the receivables list and since this particular debt that was paid two months back is still a part of the receivable then that is a clear indicator that something might be wrong
Why not A?? There is no evidence from this response to suggest fraudulent activity. The discrepancy is likely due to timing differences between payment and confirmation.
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