Positive Confirmation

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DEFINITION of 'Positive Confirmation'

An auditing inquiry that requires the customer to respond to the auditor whether the customer's records do or do not correspond with the auditor's records. Negative confirmation, on the other hand, requires a response only if there is a discrepancy. Positive confirmation is the more involved of the two options, so it is more likely to be used if the company's books are suspected to have errors.

INVESTOPEDIA EXPLAINS 'Positive Confirmation'

Both positive and negative confirmation are used in auditing accounts receivable. One way an auditor can verify the accuracy of the accounts receivable records being examined is to see if those books correctly reflect transactions that have occurred between the company and its customers. Contacting customers directly helps auditors verify that accounts listed actually exist, that balances shown as owed are correct and that payments marked as received are accurate.



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