EXTERNAL CONFIRMATION

Question 1

Define External Confirmation ?

Answer 1

• External Confirmation is a procedure of obtaining evidence by auditor directly from third party in written form (e.g;on paper,electrinuc or other medium)

Question 2

Give examples if some areas where External confirmation is used ?

Answer 2

• Debtors,Creditors,(Sample basis
• Banks,Lawyers(100%)
• Third Parties holding inventory,investment held by brokers.

Question 3

Under what circumstances confirmation is not used?

Answer 3

• Risk is low
• Total balance is not material OR Immaterial
• Evidence can be obtained from other procedures OR
• Management request auditor to not send confirmation and there isa reasonable justification for that*

Question 4

What is the reliability of evidence obtained through External Confirmation ?

Answer 4

• **Confirmation provides highly reliable evidence ( beung written, direct and written evidence )