Exposure Drafts, Comment Letters, and Statements of Position



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The Auditing Standards Board is considering the issuance of this proposed Statement to provide practitioners with additional guidance about the use of confirmations. The Board determined that additional guidance was necessary after reviewing problems identified in the peer review process, in the SEC Enforcement Releases, and in research. The Board's review indicated that practitioners do not always appropriately consider: 1. The financial statement assertions addressed by confirmations; 2. The design of the confirmation request; 3. The third party to whom the request was addressed; 4. The evaluation of confirmation results. This proposed Statement provides guidance about all types of confirmations, including accounts receivable confirmations, and establishes certain performance responsibilities for auditors using confirmations in engagements performed in accordance with generally accepted auditing standards. This proposed Statement: 1. Discusses the relationship of confirmation procedures to the auditor's assessment of audit risk and discusses financial statement assertions addressed by confirmations; 2. Describes certain factors that affect the reliability of confirmations and emphasizes that proper design of the confirmation request is key to achieving specific audit objectives; 3. Provides guidance on performing alternative procedures when responses to confirmation requests are not received; 4. Provides guidance on evaluating the results of confirmation procedures. This proposed Statement retains the notion set forth in existing standards that the confirmation of accounts receivable is a generally accepted auditing procedure. It also states that there is a presumption that the auditor will request the confirmation of accounts receivable during an audit, unless certain conditions exist. If an auditor does not request confirmations in the examination of accounts receivable, this proposed Statement requires an auditor to document how he or she overcame this presumption. This proposed Statement would supersede paragraphs 3-8 of Statement on Auditing Standards (SAS) No. 1, Codification of Auditing Standards and Procedures, section 331 (AICPA, Professional Standards, vol. 1, AU sec. 331.03-.08), and the portion of paragraph 1 of section 331 that addresses the confirmation of receivables. The proposed Statement would not supersede the portion of paragraph 1 of section 331 that addresses the observation of inventories.

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Relational Format



Corporations -- United States -- Auditing


Accounting | Taxation


Originally published by: American Institute of Certified Public Accountants; Copyright and permission to reprint held by: American Institute of Certified Public Accountants.

Proposed statement on auditing standards : the confirmation process;Confirmation process; Exposure draft (American Institute of Certified Public Accountants), 1990, Nov. 13



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