We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Accounts Receivable Confirmation?

Mary McMahon
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Accounts receivable confirmation is a technique used in the auditing process to verify a company’s records. The auditor sends communications directly to customers, asking them to confirm the records maintained by the company. This allows auditors to check for errors, which may range from deliberate falsifications to poor record keeping. Such evidence can be especially valuable because it comes from a third party outside the company who has no vested interest in the outcome of the audit, and thus can theoretically be relied upon to supply correct information.

There are two types of accounts receivable confirmation. In a positive request, the auditor asks the client to respond, confirming the accuracy of information, or correcting it if it is wrong. Negative requests indicate that clients should only respond if there is an error; the auditor assumes the information is correct if no response ever arrives. One flaw with this approach is that clients may be reluctant to write auditors, in which case the absence of evidence may not mean the company’s records are accurate.

This process involves drawing up a letter with information about the audit and the data kept on file by the company. The company supplies the names and addresses of clients, and the auditor sends out the accounts receivable confirmation paperwork. Clients are asked to respond to the auditor directly, not the company, so the paperwork never passes through the hands of people who might have a conflict of interest. Auditors compile the information, check it against records, and use it in a final audit report to express an opinion on the state of the company’s books.

The selection process for which clients should get an accounts receivable confirmation can be a mixture of carefully chosen targets and random ones. Very large outstanding as well as past due accounts may be scrutinized more closely because they are of particularly special interest. Auditors can also randomly choose from smaller accounts in good standing to get a more general picture of the company’s finances.

Using an accounts receivable confirmation can provide a wealth of valuable audit evidence. It is not without flaws, however, because clients may refuse to respond to a request, or the company might have incorrect contact information which means the requests never reach them. Auditors may have to spend substantial time researching and tracking down specific clients to collect data, which can add to the cost of the audit.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.