Confirmation of accounts receivable is normally performed on only a sample of the total population. The purpose of the confirmation is to obtain outside verification of the balance of the account and to obtain an indication of the rate of occurrence of misstatements in the accounts. Most misstatements which are indicated by the differences on the confirmation replies will not be material; however, each difference must be analyzed to determine its effect and all others considered together on the total accounts receivable balance. Though the individual differences may not be material, they may indicate a material problem when extended to the entire population, and with regard to the internal controls over the accounts receivable.
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