What is external confirmation in auditing?

External confirmation is the process of obtaining and evaluating audit evidence through a representation of information or an existing condition directly from a third party in response to a request for information about a particular item affecting assertions in the financial statements or related disclosures.

Which of the following is not considered appropriate when auditors use external confirmations?

Which of the following is NOT considered appropriate when auditors use external confirmations? The auditor should maintain control over sending the requests to the client’s customers. They should not allow management to mail the confirmation requests because of the risk that the requests could be tampered with.

Which of the following are factors to consider when designing external confirmation requests?

Factors to consider when designing confirmation requests include: The assertions being addressed. Specific identified risks of material misstatement, including fraud risks. The layout and presentation of the confirmation request.

How do you get external confirmation?

External Confirmation shall be obtained by sending request to third party to confirm the particular matter or amount. There is no standard format for framing request. The confirmation request may be designed to ask if any modifications have been made to the agreement and, if so, what the relevant details are.

Why do auditors send legal confirmations?

A legal confirmation or legal representation letter is an inquiry sent by an auditor (with their client’s approval) to a law firm engaged by the client for the purpose of determining the status of litigation, claims and assessments pertaining to the audited client.

What would auditor do when management refuses to allow the auditor to send confirmation request?

If the management refuses to allow auditor to send confirmation request:

1. Inquire management’s reasons for the refusal, and seek audit evidence for validity,
2. Evaluate the implications for such refusal.
3. Perform alternative audit procedures.

What is audit confirmation process?

Audit confirmations are used when: Before finishing audit procedures, a letter is sent to your attorney, confirming whether the information provided about any pending legal actions are both accurate and complete.

What happens if an auditor does not seek external confirmation?

If an auditor accepts that a request not to seek external confirmation is valid, they might instead use alternative procedures, which generally hinge on less reliable internal documentation. If the auditor is satisfied with the alternative procedures, their report need not acknowledge the omission of confirmations.

What is external external confirmation?

External confirmation is the process of obtaining and evaluating audit evidence through a representation of information or an existing condition directly from a third party in response to a request for information about a particular item

Do all external assurance services include confirmation?

Sometimes confirmation responses signal exceptions, requiring the auditor to determine the causes and extrapolate the misstatements. Additional procedures may be warranted, especially if management or the CPA suspects fraud. Do not assume that all external assurance services include confirmation procedures, however.

What audit procedures should be performed at the year end?

What audit procedures should be performed at the year end, if requests for confirmation of balances are sent? Prepare or obtain a client roll forward schedule. Agree Individual entries for with the sales ledger and debtors control accounts. Note and obtain explanation for any unusual journal adjustments.