Lessons · Accounting · asking somebody outside the company
Asking somebody outside the company
A confirmation is a request sent by the auditor to a third party, answered directly back to the auditor. Its strength comes from both halves: it comes from outside, and it never passes through the client's hands.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
In beta. This lesson was written for Hone and has not yet been checked by a qualified accountant. Practice material, not professional advice. What that means.
What it is for
The control of the process is the point, not the letter. A confirmation the client posts, or one returned to the client's office, has lost the property that made it worth more than an internal schedule, and a file full of those is weaker than it looks.
How to think about it
Keep control of the sending and the receiving. If a reply does not arrive, do something else rather than accepting the client's explanation of the balance.
Worked example
The auditor sends the requestNot the client.
The reply comes directly to the auditorNot via the client's office.
A reply that arrives through the client is weakerThe chain it was protecting has been broken.
No reply means an alternative procedureSubsequent payments, shipping records, something else external.
Your turn
Name where a confirmation reply must be returned to.
The reply must come directly back to the
Solve one, graded on the server
The trap
Letting the client chase the non-replies. It is helpful, it is efficient, and it removes the one property that made the procedure strong in the first place.