Audit Procedures for External Confirmation

Auditorforun has alredy discussed external confirmation its design and process. In this article audit procedures for external confimation will be discussed which will help in enhancing the uderstanding of the concept not only for students but also for professionals.

audit procedures for external confirmation

What audit procedures should be performed at the year end, if requests for confirmation of balances are sent?

Audit Procedures for External Cofirmation after sent

  1. Prepare or obtain a client roll forward schedule.
  2. Agree Individual entries for with the sales ledger and debtors control accounts.
  3. Note and obtain explanation for any unusual journal adjustments.
  4. Vouch material sales or receipts with supporting documents.
  5. Select a sample of receipts and sales and perform tests of controls to ensure that system of internal controls continued to operate effectively.
  6. Re-perform cutoff test at year end.
  7. Perform analytical procedures by comparing the balances of debtors, and ascertain reasons for major variances, if any.
  8. Check subsequent recovery of year end balances.

List the procedures that should be adopted due to management’s refusal to send a request for confirmation of balance

Audit Procedures if Management refuses to allow the auditor to send External confirmation

  1. Inquire as to management’s reason for the refusal, and seek audit evidence as to their validity    and reasonableness;
  2. Evaluate the implications of management’s refusal on the auditor’s assessment of the relevant risks of material misstatement, including the risk of fraud
  3. and on the nature, timing and extent of other audit procedures; and
  4. Perform alternative audit procedures designed to obtain relevant and reliable audit evidence.
  5. If the auditor concludes that
  • Management’s refusal to allow the auditor to send a confirmation request 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 and the auditor shall also determine the implications of the results of procedures carried out above on the audit and the auditor’s opinion.

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