During the audit of the financial statements of Good Limited for the year ended March 31, 2025, CA Aryan, the statutory auditor, requested external…

Positive confirmation request: A 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. 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. The exception needs to be assessed to the entire population after analyzing the reason for difference. In the given situation, the auditor has sent the positive confirmation request for the amount of 16,75,000 to a debtor ABC Ltd. which was outstanding for more than 6 months, however, due to difference between information requested to be confirmed, or contained in the entity's records (i.e.16,75,000), and information provided by the confirming party ABC Ltd. (i.e.15,40,000) is forming situation of exception confirmation. The auditor's evaluation, when taken into account with other audit procedures the auditor may have performed, may assist the auditor in concluding whether sufficient appropriate audit evidence has been obtained or whether performing further audit procedures is necessary, as required by SA 330 in case a response is indicating an exception. The company should be asked to investigate and reconcile the discrepancy indicated by the confirming party. Negative confirmation request – A request that the confirming party respond directly to the auditor only if the confirming party disagrees. In the given case, the auditor has sent the negative confirmation request for 14,50,000 to another debtor PQR Ltd. Non- response by the PQR Ltd. implies that it agrees with the amount. Thus, CA Aryan is not required to take any action in this case.