External Confirmations Practice Test

In an audit of a nonissuer retailer, the auditor sent positive accounts receivable confirmations to the largest customer (20% of total receivables). No response was received after a second request, and management states the customer is “too busy to respond.” Based on the circumstances, which response to a nonresponse is most appropriate?

In an audit of a nonissuer construction contractor, the auditor sent positive confirmations to a key subcontractor to confirm year-end accounts payable. The subcontractor responded with a balance $180,000 higher than the client’s accounts payable listing and included several invoices dated before year end that were not recorded by the client. What is the most appropriate follow-up procedure when a confirmation discrepancy is identified?