Positive Confirmation

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.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another market so that it balances out. So when examining a specific market, if all other markets are in equilibrium, Walras' Law asserts that the examined market is also in equilibrium.
  2. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
  3. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
  4. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option is purchased and the lower premium option is sold - both at the same time. The higher the debit spread, the greater the initial cash outflow the investor will incur on the transaction.
  5. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  6. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
Trading Center