XYZ Limited is engaged in manufacturing activities. As at 31st March 2025, the Trade Receivables balance amounted to 8 crores. The statutory auditor…

(a) As per SA 505 relating to external confirmations, the auditor shall evaluate whether the results of the external confirmation procedures provide relevant and reliable audit evidence or whether performing further audit procedures is necessary. When evaluating the results of individual external confirmation requests, the auditor may categorise such results as follows: (a) Positive confirmation request (b) Negative confirmation request; (c) A non-response; or (d) A response indicating an exception. Applying the above principles to the given case: 15 responses confirming balances without any difference: These fall under Positive confirmation request that the confirming party respond directly to the auditor indicating whether the confirming party agrees or disagrees with the information in the request, or providing the requested information. 3 responses were received directly to the auditor only if they disagree with the information provided in the request: These fall under Negative confirmation request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request. 5 customers who did not respond despite follow-up requests: These fall under non-response. A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered. A non-response does not provide audit evidence and therefore alternative audit procedures may be required. 2 responses indicating lower balances than those stated in the confirmation requests: These fall under a response indicating an exception. A response that indicates a difference between information requested to be confirmed, or contained in the entity's records, and information provided by the confirming party. Such exceptions require investigation to determine whether they represent misstatements. The auditor's evaluation of the above results, when taken into account with other audit procedures performed, shall assist in concluding whether sufficient appropriate audit evidence has been obtained, as required by SA 330.