Design of the External Confirmation RequDesign of the External Confirmation Request

Design of the External Confirmation Request

20 The auditor shall tailor external confirmation requests to the specific audit objective.

21 When designing the request, under paragraph 20 of this Auditing Standard, the auditor needs to consider the assertions being addressed. The auditor ordinarily considers the factors that are likely to affect the reliability of the confirmations. Factors such as the form of the external confirmation request, prior experience on the audit or similar engagements, the nature of the information being confirmed, and the intended respondent, affect the design of the requests because these factors have a direct effect on the reliability of the evidence obtained through external confirmation procedures.

22 Also, in designing the request, ordinarily the auditor considers the type of information respondents will be able to confirm readily since this may affect the response rate and the nature of the audit evidence obtained. For example, certain respondents’ information systems may facilitate the external confirmation of single transactions rather than of entire account balances. In addition, respondents may not always be able to confirm certain types of information, such as the overall accounts receivable balance, but may be able to confirm individual invoice amounts within the total balance.

23 Confirmation requests ordinarily include management’s authorisation to the respondent to disclose the information to the auditor. Respondents may be more willing to respond to a confirmation request containing management’s authorisation, and in some cases may be unable to respond unless the request contains management’s authorisation.