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Does detection risk increase or decrease when confirmation procedures are performed prior to year-end?

Let’s say that the auditors decide to perform cash or accounts receivable confirmations on September 30, Year 2 rather than December 31, Year 2. This means that they are performing substantive confirmation procedures 3 months prior to year-end. By performing substantive procedures prior to the balance sheet date, this increases the risk of material misstatement since the confirmation procedures aren’t performed as of the balance sheet date (December 31, Year 2).

By doing so, the audit team is increasing the level of detection risk. This means that there is a greater chance of the audit team not identifying a material misstatement in the financial statements.

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