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ISA 505, EXTERNAL CONFIRMATIONS
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ISA 505, EXTERNAL CONFIRMATIONS
In the case of each non-response, the auditor shall perform alternative audit procedures to obtain relevant and reliable audit evidence
The objective of the auditor, when using external confirmation procedures, is to design and perform such procedures to obtain relevant and reliable audit evidence.
External confirmation – Audit evidence obtained as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic or other medium.
When using external confirmation procedures, the auditor shall maintain control over external confirmation requests, including
If the auditor concludes that management’s refusal to allow the auditor to send a confirmation request is
unreasonable, or the auditor is unable to obtain
relevant and reliable audit evidence from alternative audit procedures, the auditor shall communicate with those charged with governance in accordance with ISA 260.
- Determining the information to be confirmed or requested;
- Selecting the appropriate confirming party;
- Designing the confirmation requests, including determining that requests are properly addressed and contain return information for responses to be sent directly to the auditor;
- Sending the requests, including follow-up requests when applicable, to the confirming party.
If management refuses to allow the auditor to send a confirmation request, the auditor shall:
- Inquire as to management’s reasons for the refusal, and seek audit evidence as to their validity and reasonableness;
- Evaluate the implications of management’s refusal on the auditor’s assessment of the relevant risks of material misstatement;
- Perform alternative audit procedures designed to obtain relevant and reliable audit evidence.