Which statement is true about the audit procedure of confirming accounts payable?

• A. Confirmation of payables is most appropriate when the auditor expects understatement errors.
• B. It is not productive to mail second requests.
• C. The auditor is not required by current professional pronouncements to justify his or her opinion on financial statements when payables are not confirmed.
• D. Payables are usually confirmed as of an interim date.

Answer: (C)

Confirmations of accounts payable are a way to obtain direct evidence about the existence and accuracy of liabilities, but they have limitations (like nonresponse or vendors not replying). Because of these limits, auditors don’t rely on confirmations alone and use additional procedures to gather sufficient appropriate evidence, forming the opinion based on the total body of evidence.

The statement that the auditor is not required by current professional pronouncements to justify the opinion on the financial statements when payables are not confirmed is the best choice because, even if confirmations aren’t obtained, the auditor can still justify the overall opinion with other evidence and appropriate alternative procedures. The audit opinion is not tied to a single confirmation outcome; it rests on the combined evidence in the audit file.

The other ideas don’t fit practice as well: confirmations aren’t necessarily most appropriate only when understatement errors are expected, second requests are a standard and productive follow-up when first requests aren’t returned, and payables are typically confirmed as of the balance sheet date rather than an interim date.