i) Examples of external confirmation:

1. Accounts receivable confirmation
2. Bank confirmation
3. Legal confirmation (lawyer’s letter)
4. Inventory held by third parties
   (4 points @ 0.5 marks each = 2 marks)

ii) Audit assertions supported and not supported by external confirmation:

1. Accounts receivable confirmation
   • Supports: Existence (confirmation from the debtor provides evidence that the receivable exists).
   • Does not support: Valuation (the confirmation does not provide information on the likelihood of the receivable being collectible).
2. Bank confirmation
   • Supports: Existence (confirms the existence of bank balances).
   • Does not support: Completeness (it does not confirm whether all bank accounts have been disclosed).
3. Legal confirmation (lawyer’s letter)
   • Supports: Rights and obligations (provides evidence on potential legal obligations).
   • Does not support: Valuation (it does not quantify the financial impact of ongoing legal cases).
4. Inventory held by third parties
   • Supports: Existence (confirms that the inventory is held by a third party).
   • Does not support: Valuation (it does not provide details on the condition or value of the inventory).