ACCA Audit and Assurance (F8) Practice Exam

What can be a reason for disagreements found during confirmation procedures?

1. Differences in accounting software

2. Customer disagreements and mis-posting

3. Lack of communication prior to confirmation

4. Excessive invoice numbers

The correct answer is: Customer disagreements and mis-posting

The selection of customer disagreements and mis-posting as a reason for discrepancies found during confirmation procedures highlights a critical aspect of the audit process. When auditors send confirmation requests to customers to verify account balances or transactions, the responses may reveal disagreements over these balances due to several factors. Customer disagreements can arise from misunderstandings or misinterpretations of transactions. For instance, if a customer believes they have made a payment that has not been recorded on the company's books, this will lead to a discrepancy during confirmation. Similarly, mis-posting occurs when transactions are recorded inaccurately in the accounting records, which can result in the company and the customer having different records of what is owed or paid. These factors directly impact the reliability of the financial statements being audited, making them essential points of focus during the confirmation process. In contrast, differences in accounting software may complicate data retrieval but do not inherently lead to significant disagreements if the records are accurate. Lack of communication prior to confirmation could lead to customers not being prepared to respond adequately, but it does not itself result in discrepancies concerning numbers. Excessive invoice numbers might create confusion but typically do not account for the mismatches that occur during confirmation; rather, they could lead to administrative challenges rather than fundamental disagreements about account balances.