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Glossary/Audit procedures

Alternative procedures

Alternative procedures are other audit tests performed to get the evidence a confirmation would have provided, used when a confirmation request is not returned or a reply is unreliable.

CORAA TeamUpdated November 5, 2026

Definition

When a positive confirmation goes unanswered after follow-up, AU-C 505 requires the auditor to perform alternative procedures to obtain relevant and reliable evidence. The procedures must address the same assertion as the confirmation. For receivables that usually means examining subsequent cash receipts and the underlying shipping and sales documents.

Why it matters in an audit or review

A nonresponse is not evidence of accuracy. Without a substitute test, the assertion goes unsupported. If the auditor decided a positive confirmation was needed to obtain sufficient appropriate evidence, alternative procedures may not supply it, and the auditor considers the effect on the audit and the opinion. If management refuses to allow a confirmation and the refusal is not justified, the auditor must consider the effect on the audit and on fraud risk, and communicate with those charged with governance.

Example

Six of 25 positive receivable confirmations (illustrative) are unanswered after a second request. For five, the auditor agrees January cash receipts to the bank statement and matches them to invoice numbers, which cover the balance. For the sixth, no payment has been received, so the auditor inspects the contract, shipping record and signed delivery receipt.

Common mistakes

  • Using only the invoice copy, which management produced.
  • Applying an alternative that tests a different assertion.
  • Not following up first.

FAQ

Can subsequent receipts alone cover existence?

Often, if the cash is applied to the specific invoices. Not for valuation or rights without other work.

Sources

  • AICPA, AU-C Section 505, External Confirmations
  • AICPA, SAS No. 150, External Confirmations (amends AU-C 330 and 505; periods ending on or after December 15, 2028)
  • AICPA, AU-C Section 500, Audit Evidence

Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error

Standards

AU-C 505

Related terms

  • External confirmation
    External confirmation is audit evidence obtained as a direct written response from a third party, on paper or electronically, about a balance, term or transaction, using positive or negative request forms.
  • Confirmation exceptions
    A confirmation exception is a reply that disagrees with the recorded amount or terms. The auditor investigates each one to decide whether it is a misstatement, a timing difference or an unreliable response.
  • Vouching
    Vouching is working backward from a recorded amount in the accounting records to the original supporting document, mainly to test for overstatement or whether a recorded item actually occurred.
  • Subsequent disbursements testing
    Subsequent disbursements testing examines payments made after year end to see whether they relate to liabilities that existed at the balance sheet date but were not recorded.

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