Distinguish between ‗positive‘and ‗negative‘debtors circularization procedures

In positive circularization the debtor is asked to confirm to the auditor directly if he agrees or disagrees with the balance whereas in negative circularization, the customer is only asked to respond if he disagrees with the balance stated in the request letter. Positive circularisation is mainly used where the debtors‘ balances are material and the internal controls are not very reliable while negative circularisation is mainly used where the debtors‘ balances are not very significant.



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