IAASB Staff Practice Alert on External Confirmations
The IAASB has issued a Staff Alert addressing emerging practice issues pertaining to the use of external confirmations in financial report audits. It discusses various aspects of the use of confirmations including that: (i) they can be effective tools in obtaining reliable and relevant audit evidence, but that the type of assertion being tested must be carefully considered; (ii) the auditor must be alert to confirmations being intercepted, altered or otherwise associated with fraud; (iii) there are risks associated with receiving confirmations electronically; and (iv) auditors need to carefully consider any disclaimers or other restrictions. Although referencing ISAs, this alert provides useful guidance to auditors in Australia. Guidance statement AGS 1002 Bank Confirmation Requests (currently under review by the AUASB) also provides members in Australia with further specific guidance.