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1.In practice question (chap 17 que 2 ) receivables confirmation letter is to be sent by auditors requesting replies directly to auditors..however in kaplan studytext (chap10 illustration 3) .. letter is sent by client to the customers requesting replies to auditors.
Which one is correct ..?2.Also ..for bank confirmation letter ..in kaplan text its given that it will be semt by auditors requesting replies to auditors ..is it right ?
ISA 505 states: “When using external confirmation procedures, the AUDITOR shall maintain control over external confirmation requests, including:
(a) Determining the information to be confirmed/requested;
(b) Selecting the appropriate confirming party;
(c) Designing the confirmation requests, including determining that requests are properly addressed and contain return information for responses to be sent directly to the auditor; and
(d) SENDING the requests, including follow-up requests when applicable, to the confirming party.”In designing the confirmation request – i.e. the information to be included – the letter must instruct the customer to send the response directly to the auditor and that this is with the client’s permission. This can be achieved in two ways (as the ISA is not prescriptive on this matter) – the letter can be from the client (“please confirm your balance with us directly to our auditor”) or from the auditor. In the latter case, the letter would have to include the client’s permission/authority to respond to the auditor. In either case, the letters MUST be SENT by the AUDITOR.
2. Yes – the process of external confirmation is the same.
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