Explain the reason for obtaining independent confirmation prescribed under SA 505? What alternate procedures should the auditors, Ranveer and Ranvir…

External confirmation procedures are an effective and efficient way to obtain audit evidence about financial statement assertions such as trade receivable with number of days outstanding – being significantly higher than industry average. External confirmations also help auditor obtain audit evidence from third parties with a high level of reliability when responding to significant risks. Decision whether to use external confirmation procedures requires significant judgement as envisaged in SA 505 including the objectivity of the confirming party and the willingness of the confirming party to respond. The auditor should exercise an appropriate level of professional skepticism throughout the confirmation process. Professional skepticism is important in designing the confirmation request, performing the confirmation procedures and evaluating the results of the confirmation procedures. When the auditor do not receive replies to positive confirmation requests, the auditor as required under SA 505 apply alternative procedures to the non-responses to obtain the evidence necessary to reduce audit risk to an acceptably low level. The nature of alternative procedures to be performed varies according to the account and assertion. Alternative procedures related to the confirmation of trade receivables may include examination of subsequent cash receipts or other entity documentation to provide evidence for the existence assertion. The auditor should evaluate the combined evidence provided by the confirmations and the alternative procedures performed to determine whether it is sufficient to achieve our audit objectives and if it is relevant and reliable. If the combined evidence provided by the confirmations, alternative procedures and other procedures is not sufficient, the auditor should request additional confirmations or perform other tests, such as tests of details or analytical procedures, to the extent needed to obtain the desired audit evidence.