Document ID: chunk:federal_register_of_legislation:F2021C01273:reg:3:p3
Version: federal_register_of_legislation:F2021C01273
Segment Type: reg
Provision Reference: reg 3 (pt 3/10)
Character Range: 11771–15161

confirmation requests to obtain additional corroborative information as a response to address the assessed risks of material misstatement due to fraud at the assertion level.[10]

           * ASA 500 indicates that corroborating information obtained from a source independent of the entity, such as external confirmations, may increase the assurance the auditor obtains from evidence existing within the accounting records or from representations made by management.[11]

Effective Date

4.                   [Deleted by the AUASB.  Refer Aus 0.3]

Objective

5.                   The objective of the auditor, when using external confirmation procedures, is to design and perform such procedures to obtain relevant and reliable audit evidence.

Definitions

6.                   For purposes of the Australian Auditing Standards, the following terms have the meanings attributed below:

(a)                External confirmation means audit evidence obtained as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic or other medium.

(b)                Positive confirmation request means a request that the confirming party respond directly to the auditor indicating whether the confirming party agrees or disagrees with the information in the request, or providing the requested information.

(c)                Negative confirmation request means a request that the confirming party respond directly to the auditor only if the confirming party disagrees with the information provided in the request.

(d)                Non-response means a failure of the confirming party to respond, or fully respond, to a positive confirmation request, or a confirmation request returned undelivered.

(e)                Exception means a response that indicates a difference between information requested to be confirmed, or contained in the entity's records, and information provided by the confirming party.

Requirements

External Confirmation Procedures

7.                   When using external confirmation procedures, the auditor shall maintain control over external confirmation requests, including:

(a)                Determining the information to be confirmed or requested; (Ref: Para. A1)

(b)                Selecting the appropriate confirming party; (Ref: Para. A2)

(c)                Designing the confirmation requests, including determining that requests are properly addressed and contain return information for responses to be sent directly to the auditor; and (Ref: Para. A3-A6)

(d)                Sending the requests, including follow-up requests when applicable, to the confirming party.  (Ref: Para. A7)

Management's Refusal to Allow the Auditor to Send a Confirmation Request

8.                   If management refuses to allow the auditor to send a confirmation request, the auditor shall:

(a)                Enquire as to management's reasons for the refusal, and seek audit evidence as to their validity and reasonableness; (Ref: Para. A8)

(b)                Evaluate the implications of management's refusal on the auditor's assessment of the relevant risks of material misstatement, including the risk of fraud, and on the nature, timing and extent of other audit procedures; and (Ref: Para. A9)

(c)                Perform alternative audit procedures designed to obtain relevant and reliable audit