I got this question right and put B, but isn't D correct as well. Unless I am reading it wrong the explanation just restates the answer.
In auditing accounts receivable the negative form of confirmation request most likely would be used when:
a. The auditor performs a dual purpose test that assesses control risk and obtains substantive evidence.
b. The combined assessed level of inherent and control risk relative to accounts receivable is low.
c. A small number of accounts receivable are involved but a relatively large number of errors are expected.
d. Recipients are likely to return positive confirmation requests without verifying the accuracy of the information.
Explanation
Choice “b” is correct. Negative confirmations are used when the combined assessed level of inherent and control risk is low, a large number of small balances is involved, and the auditor has no reason to believe that the recipients of the requests are unlikely to give them consideration.
Choice “d” is incorrect. Blank positive confirmations should be used if the recipient is likely to return a positive confirmation without verifying the accuracy of the information.
EDIT: I just realized the explanation says blank POSITIVE confirmations. My fault… ignore this post.
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