Preparation and Despatch of Bank Confirmation Letter Flashcards
What is the responsibility of the auditor?
Control over the content and dispatch of confirmation requests
What are ways of seeking confirmation of balances or other information from the bank (listing balances)
Listing balances and other information, and requesting confirmation of their accuracy and completeness
What are ways of seeking confirmation of balances or other information from the bank (requesting details of balances)
Requesting details of balances and other information, which can then be compared with the requesting client’s records
What should auditors weigh when considering appropriateness of these two methods?
The quality of audit evidence they require in particular curcumstances against the practicality of obtaining a reply from the confirming bank
What should request letter provide?
Account description number and type of currency for the account
Most commonly requested in respect of balances?
The client entity on current, deposit, loan and other accounts
What information should be requested?
Information about nil balances on accounts, and accounts which were closed in 12 months prior to chosen confirmation date
What may client entity ask for?
Balances on accounts
Maturity and interest terms on loans and overdrafts
Unusued facilities
Lines of credit
Details of any collateral received
What are the client entity and its auditors likely to request?
Confirmation of contingent liabilities, such as those arising on guarantees, comfort letters and nills
What do banks often hold?
Securities and other items in safe custody on behalf of customers
What may request letter ask for?
Confirmation of such items held by the bank
