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Does the permission of management is required before sending circulars to debtors to confirm account balance? Or the auditor can directly send it to debtor without consent of management?
Can confirmation procedure be applied for class of transaction in any way?
Auditor must ALWAYS obtain management’s consent (confidentiality/common courtesy).
Auditor would not request confirmation of an entire class of transactions – financial statements (and IFRS) focus on SoFP – so audit is focused on balances (in substantive procedures) rather than transactions (satisfactory results of TOCs reduce substantive procedures).
Auditor does however apply confirmation to classes of events (e.g. re legal liabilities).
So, If management asks auditor not to perform circularization, what should he do then?
Means confirmation procedure is an irrelevant audit procedure to be applied on any item of Income statement?
If auditor considers any audit procedure to be essential and client “prevents”, in the absence of alternative (to meet the same audit objectives) there would be a limitation in scope. If material, this would result in a qualified opinion.
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