External Confirmation (5)

Question 1

What is an exception?

Answer 1

A response that indicates a difference between information requested to be confirmed, or contained in entity’s records, and information provided by confirming party

Question 2

What is a non-response?

Answer 2

A failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered

Question 3

What results in an exception?

Answer 3

External confirmation response disagrees with the balance stated

Question 4

What may exceptions indicate?

Answer 4

Misstatements or potential misstatements in the FSs and must be investigated by the auditor

Question 5

What must auditor evaluate?

Answer 5

Whether misstatements identified are indicative of fraud in line with ISA 240

Question 6

What may exceptions indicate?

Answer 6

A deficiency in internal control

Question 7

What do not all exceptions represent?

Answer 7

Misstatements (e.g. timing or clerical errors)

Question 8

What happens where no response is received?

Answer 8

Auditor shall perform alternative audit procedures to obtain relevant and reliable audit evidence

Question 9

Non-response to external confirmation (back up documentation)

Answer 9

Verify outstanding items to back up documentation. E.g. invoices, GDNs, customer orders

Question 10

Non-response to external confirmation (cash received)

Answer 10

Review cash received after year end

Question 11

Non-response to external confirmation (responsible)

Answer 11

Discuss with responsible company official