circularization of debtors

circularization of debtors
A technique used by an auditor in which all debtors to a company are asked to confirm the amounts outstanding (positive circularization) or to reply if the amount stated is incorrect or in dispute (negative circularization). The object is to ensure that the debts do exist and are correctly valued in the financial statements of a company.

Accounting dictionary. 2014.

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  • confirmation — A technique used by an auditor to obtain third party evidence in support of information supplied by a client. For example, confirmation may be sought from a bank of balances held by a client (see bank confirmation). See also: circularization of… …   Accounting dictionary

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