![]() Otherwise, the auditor would need to perform alternative procedures.Īlthough written confirmations are still permitted, auditors routinely use electronic confirmations today. Alternatively, the auditor could contact nonresponding recipients by phone or in person. ![]() If an auditor failed to receive an adequate level of response, follow-up confirmation letters could be sent, which could lead to delays in the audit process. Then, they waited to receive written responses from their audit clients’ customers, suppliers, banks, benefits plan administrators, attorneys, and others. In the past, auditors sent out confirmation letters through the U.S. If the procedures aren’t performed as of the balance sheet date, the account balance will need to be rolled forward (or backward) to the balance sheet date. Instead, it requests recipients to complete a blank confirmation form.Ĭonfirmation procedures may be performed as of a date that’s on, before, or after the balance sheet date. Blank: The amount (or other information) isn’t stated on this type of request. Negative: Recipients are requested to reply directly to the auditor only if they disagree with the information presented on the confirmation.ģ. Positive: Recipients are requested to reply directly to the auditor and make a positive statement about whether they agree or disagree with the information included.Ģ. Confirmations generally come in the following three formats:ġ. The types of confirmations your auditor uses will vary depending on your situation and the nature of your organization’s operations. But confirmations are an important part of the auditing process that you’ll better appreciate if you learn more about them. Some companies may be put off when auditors reach out to customers, lenders, and other third parties - and sometimes confirmation recipients fail to respond in a timely, complete manner. Generally Accepted Auditing Standards, an external confirmation is “a direct response to the auditor from a third party either in paper form or by electronic other means, such as through the auditor’s direct access to information held by a third party.” Auditors commonly use confirmations to verify such items as cash, accounts receivable, accounts payable, employee benefit plans, and pending litigation.
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