![]() ![]() Negative confirmation request – A request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request.Positive confirmation request – A request that the confirming party respond directly to the auditor indicating whether the confirming party agrees or disagrees with the information in the request, or providing the requested information.If the auditor determines that response to confirmation request is not reliable, the auditor shall evaluate the implications on the assessment of the relevant risks of material misstatement, including the risk of fraud, and on the related nature, timing and extent of other audit procedures. Ifthe auditor has doubts about reliability of response, he shall obtain further evidences to resolve the doubts. Results of the External Confirmation Procedures If management refusal is unreasonable, or the auditor is unable to obtain relevant and reliable audit evidence from alternative audit procedures, the auditor shall communicate with those charged with governance. Evaluate the implications for such refusal.Inquire management’s reasons for the refusal, and seek audit evidence for validity,.If the management refuses to allow auditor to send confirmation request: Management refusal for external confirmation Email confirmation is also a valid confirmation. The auditor may give a list of accounts selected for confirmation to the management for preparing requests for confirmations, which should be properly addressed and stamped.The auditor should ensure that it is the auditor who sends out the confirmation requests, and it is requested that all replies and the undelivered confirmations are delivered directly to the auditor. Sending the requests, including follow-up request.Īuditor shouldensure direct communications with the confirming partiesto minimize the possibility that the results of such confirmation process will be biased because of the interception and alteration of confirmation request or responses.Įxternal Confirmation shall be obtained by sending request to third party to confirm the particular matter or amount.Designing the confirmation requests, being properly addressed with information for responses to be sent directly to the auditor and.Selecting the appropriate parties from whom confirmation is required.Determining the information to be confirmed.The following are the steps involved in obtaining external confirmation: To obtain sufficient and appropriate audit evidence by performing substantive procedures one of the method of collecting audit evidence is the External Confirmation. The auditor identifies and assess the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for opinion.Įxternal Confirmation is required to obtain such reasonable assurance on the financials of a company. The aim is to explain the need and procedures of external evidences.Īn auditor responsibility for the audit of the financial statement is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. SA-505 deals with the auditor’s use of external confirmation procedures to obtain audit evidence in accordance with the requirements of SA 330 and SA 500 as audit evidence is more reliable when it is obtained directly by the auditor from independent sources outside the entity in documentary form. ![]() To assess the level of control risk, we exercise compliance procedures and based on the findings of the compliance procedures and other considerations like materiality, we decide the nature and extent of substantive procedures to be performed.Īs per SA-200 the one of the basic objective of the auditor is “to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework”.įurther SA 200 states that “to obtain reasonable assurance, the auditor shall obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level and thereby enable the auditor to draw reasonable conclusions on which to base the auditor’s opinion”.Įxternal Confirmation is a substantive procedure used to obtain audit evidence. ![]() Sufficiency and appropriateness of audit evidence shall depend on the assessed level of inherent and control risk of the entity. ![]() An auditor should obtain sufficient appropriate audit evidence in order to give opinion on the true and fair view of financials. ![]()
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