11+ Audit Confirmation Templates in MS Word | Excel | PDF

What is Positive and Negative Confirmation in Auditing?

A positive confirmation is an interrogation made by an auditor to a third party that needs a response. A positive confirmation is deemed to signify a higher quality of proof than a negative approval since the auditor obtains explicit proof from the third party.

What are the Steps to the Traditional Audit Confirmation Methods?

The standard audit confirmation method includes multiple manual actions and normally requires the following five steps:

1. The audit customer gives the accounting firm exportation of their consumers and suppliers including the accounts receivable and payable balances from their accounting method. It is imperative that the accounting firm get accurate accounts receivable and payable data from the audit customer’s documents.

2. The accounting firm chooses a representative sampling from the audit client’s export and produces the audit confirmations with the guidance of the mail merge features standard in different word processing devices. The resulting audit confirmations include as a least the client or supplier, the amount in question, the balance sheet date and a confirmation request.

3. The accounting firm sends the audit confirmations to the audit client’s consumers and suppliers both by post or electronically as an e-mail attachment.

4. It is responded by the audit client’s consumers and suppliers back to the audit confirmation by utilizing a self-addressed and imprinted envelope or by returning the individual email sent by the accounting firm. This step can usually need various manual reminders in order to obtain an acceptable response rate.

5. The accounting firm records the answers separately as they come in and forms the final audit evidence for the accounting sector. The accounting firm most frequently registers the audit confirmations manually, which raises the risk for data entry mistakes particularly when trading with various currencies and many customers and suppliers.