## Negative Confirmation Request

Confirming party responds only if they DISAGREE with the information
Provides less persuasive audit evidence than positive confirmation
Cannot be used as the sole substantive procedure unless ALL four conditions are met (mnemonic: SALA):

Letter	Condition
S	Population comprises a large number of Small, homogeneous account balances/transactions
A	ROMMS is assessed as low AND sufficient AE from operating effectiveness of controls is obtained
L	A very Low exception rate is expected
A	Auditor is not Aware of circumstances causing recipients to disregard such requests

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## Non-Response (to Positive Confirmation)

Failure of confirming party to respond (or fully respond) to a positive confirmation request, or request returned undelivered.

Non-response does NOT confirm the balance is correct
The auditor must perform alternative procedures (e.g., examine subsequent cash receipts)

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## Non-Response to Negative Confirmation

Provides significantly less persuasive evidence than a response to a positive confirmation
Does NOT indicate receipt of the request or verification of accuracy
Confirming parties are more likely to respond when information is unfavourable to them → silence tends to be less informative

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## Exception

A response indicating a difference between:

Information in the entity's records, and
Information provided by the confirming party

Exceptions may indicate timing differences, errors, or fraud — each must be investigated.

Worked example

### Example 1

Auditor uses negative confirmations for 5,000 retail debtors (average balance ₹2,000, clean aging, strong billing controls, no known disputes). All four SALA conditions are met → negative confirmation is permissible as the sole procedure. If any one condition fails (e.g., ROMMS is moderate), negative confirmation cannot be the sole procedure.

### Example 2

Debtor B does not respond to a positive confirmation. Auditor cannot assume the balance is correct. Alternative procedure: review cash receipts received after year-end from Debtor B to verify the balance was subsequently paid, confirming existence and valuation.

### Example 3

Debtor C responds: 'Our records show ₹2,80,000, not ₹3,45,000 as stated.' This is an exception — ₹65,000 difference. Auditor investigates: finds ₹60,000 payment was in transit at year-end (timing difference) and ₹5,000 is a disputed invoice. Timing difference is not an error; the dispute requires further evaluation.

⚠️ Common exam mistakes

Treating non-response to a negative confirmation as confirmation of the balance — silence on a negative confirmation means nothing; it does NOT confirm accuracy
Using negative confirmations as the sole procedure without verifying ALL four SALA conditions — all four must be present simultaneously
Confusing 'exception' (a disagreement in amount) with 'non-response' (silence) — they are distinct outcomes requiring different follow-up actions
Forgetting that non-response to a positive confirmation requires alternative procedures — it is not a 'clean' result

Reference: — SA 505 – External Confirmations

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Negative Confirmation, Non-Response, and Exception

Worked example

⚠️ Common exam mistakes