The Confirmation Process
Independent auditors are required to obtain "sufficient
appropriate audit evidence" to support their opinion on the
"Sufficient" relates to the quantity of audit evidence
obtained. Has the auditor gathered enough?
"Appropriate" relates to relevance and reliability.
All three baseline elements must be in place for the
auditor to fulfill his responsibilities. It doesn't
matter how much audit evidence the auditor obtains; if that
evidence isn't reliable, then the audit quality has been
Questions regarding the use of confirmations relate to their
reliability. Are electronic confirmations as reliable as
paper confirmations? In fact, evidence suggests that
electronic confirmations are more reliable than paper.
Building a Reliable Confirmation Process
The stewardship of audit quality rests upon a variety of
standards setting organizations. The rules for auditor
performance are set by the AICPA (audits of non-public companies),
the PCAOB (audits of public companies) and the IAASB (international
Although the language of the three standards may vary,
fundamentally they all agree on the four tenets of performing a
- Communicate directly with and receive an active response from
the third party
- Exercise professional skepticism
- Identify and validate a respondent who is free from
bias and authorized to respond
- Maintain control of the confirmation process
Only by following these four tenets can the auditor ensure
that the confirmation he or she receives is meaningful.
Reliable Are Paper-Based Confirmations?
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