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Are related party confirmations a must, or can the auditor perform alternative procedures to satisfy themselves?
I know that cash confirmations cannot be replaced with alternative procedures, what about related party confirmations?
Thank you in advance!
Auditor generated, outside source, original not copy, written … just how good do you think third party written confirmations are in the audit evidence rankings?
In terms of quality of audit evidence, you’d struggle to find any better!
So what’s the problem with obtaining them?
If you’re being prevented by the client board, THEN you have to put on your deeply-skeptical auditors’ hat!
OK?
Thank you, great response!
I am not prevented by the client, it is the related party themselves who are unable to give such confirmation due to technical problems which I am well aware of and it is a special case actually where I am satisfied that the problem exists and so I am reassured that there isn’t a requirement for deep scepticism (but I sure get what you mean, in a normal situation, yes indeed it is concerning).
I guess I will have to look for alternative procedures but I figured I should ask because I felt that these confirmations may be a must, either obtained or a qualification – I am going to look further into the standard too!
Thank you 🙂
It wasn’t me that closed this thread – ok, I accept that there must be some situations where a related party is not able to give confirmation … why? would be interesting! Technical problems? Intriguing!
I’m wondering just how effective alternative procedures might be. For example, if you’re not going to get direct confirmation (ok, I accept that) then surely that would lead to the auditor (it certainly would if it were me!) thinking “What else may they be hiding behind this cloak of ‘technical problems’ ”
“Technical problems” is quite brilliant! I can imagine a conversation going along like:
“Will you please confirm that this is a complete record of your dealings with this company?”
“Ah, no, sorry. I’m not able to because of technical problems”
“Exactly what technical problems”
“Ah well, I’m not able to tell you exactly what the technicalities are behind these problems”
“Why can’t you tell me what are the technicalities behind the problems?”
“Now that’s another problem, sorry. The technicalities behind the technical problems are themselves much too technical for even a complex mind like yours to appreciate”
Basically, I’m not happy with an easy excuse of “technical problems” and the fact that the door is now open to hide the non-disclosure of any matter that the client doesn’t want the auditor to know about behind this wonderful Harry Potter Invisibility Cloak
I’m very skeptical!
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