External confirmation is a process used by auditors to obtain independent verification of information from third parties, such as banks and clients. Auditors send confirmations to verify specific balances, such as bank accounts, receivables, payables, and certain investments. There are instances where auditors may choose not to use confirmations, such as when evaluating liabilities or the ability of debtors to pay.

1. #AskKTPAudit 13/05/22
Why does my auditor have to send out
the confirmation to my customer,
don’t they trust me??
ISA 505 - External confirmation

2. #AskKTPAudit 13/05/22
First,
what is external confirmation?

3. #AskKTPAudit 13/05/22
What is external confirmation?
External confirmation is the process of
obtaining and determining audit evidence via
a third-party representation of information
directly.

4. #AskKTPAudit 13/05/22
So,
When auditor has to send it?

5. #AskKTPAudit 13/05/22
Auditor sends the confirmation when
they need to verify :
 Bank balances and
other information from
bankers
 Account receivables
and payables
balances
 Loan from
lenders

6. #AskKTPAudit 13/05/22
Auditor sends the confirmation when
they need to verify :
 Investments purchased
from stockbrokers but
not delivered at the
year ended
 Property title deeds
are held by lawyers or
financiers for safe
custody or security

7. #AskKTPAudit 13/05/22
Sometimes,
the auditor doesn’t use audit
confirmation

8. #AskKTPAudit 13/05/22
When not to use audit confirmation?
 When defining
any unrecorded
liabilities from
suppliers
 When confirming
the valuation of
goods held on
consignment
 When examining
the debtors’ ability
to pay the
outstanding
balances
 When the information
is not adequately
addressed by
confirmation

9. #AskKTPAudit 13/05/22
So don’t ask KTP why send audit
confirmation ?

10. #AskKTPAudit 13/05/22
Or
My friend’s auditor don’t send any
confirmation for every universe