I'm in the USA and obviously our standards are different on paper, but would you agree that about 90% of our standards are the same, and the other 10% mostly boils down to a few semantics? I have to say you are far more engaging than any continuing education class I've taken in person or online in the states! You do such a fantastic job of breaking down concepts to the basics - I really wish you could break down some of the crazy new standards going on here for us! :) Speaking of confirmations, have you ever encountered any reason for using negative confirmations at all over positive? I could maybe see if you were auditing a bank and going to send a ton of confirmations their checking accounts, but I think you wouldn't do that with their loan accounts since that's an asset and that's where your more concerned with overstatement and collectibility. I can't think that I'd ever send negative confirms for cash, A/R, or even notes payable.... If we can't get it confirmed, we just do alt. procedures. Online confirmations are a ridiculous ripoff so we avoid them if at all possible and do what we can through snail mail or email. I can't really think of an instance where sending negative confirms would actually be useful though? Do you know of any? Thanks so much for your fantastic videos!! Finally someone can explain things without 300,000 acronyms.
Hi Dr Amanda, thank you for your videos they always help me out. Please advise if and how to raise a finding if the signatories in the confirmation differ from the signatories per management's representations. The balances are correct though. What kind of finding is it and is it material? Since it can be quantified in numbers to compare to the materiality.
Hi. Thanks for such a great video. I was just wondering if there are some alternative procedures other than subsequent clearance? Because sometimes the payments are not received within the period of audit due to the customary credit terms. I would appreciate if you can list the alternative procedures in such cases. Once again, thumbs up for the video.
Hi Amar! A good question - the alternative would be to prove that all the sales for a sample of debtors occurred and were recorded accurately. If you can’t test the Dr side of the journal - test the Cr side 😊
Are these legally required in the EU as well, or just best practice? If this standard is legally required, then do I understand it correct if I say that we must always try to contact the 3rd parties before we choose to do a cash receipt or cash payment test? Considering how the paragraphs are written..
Hi! The EU requires that entities use the International Standards on Auditing. Now, these ones are the Australian equivalents and our wording (for legal enforcement) say the auditor “shall” or “must”. You’ll need to check the EU-adopted versions to determine if they say shall/must or “may” - which is more optional. You have to do something to test receivables and payables. In the US, receivable confirmations are compulsory. But in most other jurisdictions, the auditor has the ability to use their professional judgement to decide whether to use a subsequent cash test or confirmation. For some audit firms, it is opt-in to confirmations. In others, it is included unless you opt-out
You're just amazing, Dr. Amanda. Thanks once more.
I'm in the USA and obviously our standards are different on paper, but would you agree that about 90% of our standards are the same, and the other 10% mostly boils down to a few semantics?
I have to say you are far more engaging than any continuing education class I've taken in person or online in the states! You do such a fantastic job of breaking down concepts to the basics - I really wish you could break down some of the crazy new standards going on here for us! :)
Speaking of confirmations, have you ever encountered any reason for using negative confirmations at all over positive? I could maybe see if you were auditing a bank and going to send a ton of confirmations their checking accounts, but I think you wouldn't do that with their loan accounts since that's an asset and that's where your more concerned with overstatement and collectibility. I can't think that I'd ever send negative confirms for cash, A/R, or even notes payable.... If we can't get it confirmed, we just do alt. procedures. Online confirmations are a ridiculous ripoff so we avoid them if at all possible and do what we can through snail mail or email. I can't really think of an instance where sending negative confirms would actually be useful though? Do you know of any?
Thanks so much for your fantastic videos!! Finally someone can explain things without 300,000 acronyms.
Thank you for that. Very insightful.
You are most welcome Erick!
Hi Dr Amanda, wouldn’t the inability to obtain sufficient appropriate audit evidence results in an Adverse/Disclaimer audit opinion? 18:50
Not if it was just A/R - scope limitation for Qualified opinion at best
Hi Dr Amanda, thank you for your videos they always help me out.
Please advise if and how to raise a finding if the signatories in the confirmation differ from the signatories per management's representations.
The balances are correct though.
What kind of finding is it and is it material? Since it can be quantified in numbers to compare to the materiality.
This is with regards to a Bank confirmation.
Hi. Thanks for such a great video. I was just wondering if there are some alternative procedures other than subsequent clearance? Because sometimes the payments are not received within the period of audit due to the customary credit terms. I would appreciate if you can list the alternative procedures in such cases.
Once again, thumbs up for the video.
Hi Amar! A good question - the alternative would be to prove that all the sales for a sample of debtors occurred and were recorded accurately. If you can’t test the Dr side of the journal - test the Cr side 😊
What alternative procedures we can do if bank confirmations are not received?
A really good question and I’ve never experienced it. Not receiving one would be a scope limitation on the audit and reason for modification
Are these legally required in the EU as well, or just best practice? If this standard is legally required, then do I understand it correct if I say that we must always try to contact the 3rd parties before we choose to do a cash receipt or cash payment test? Considering how the paragraphs are written..
Hi! The EU requires that entities use the International Standards on Auditing. Now, these ones are the Australian equivalents and our wording (for legal enforcement) say the auditor “shall” or “must”. You’ll need to check the EU-adopted versions to determine if they say shall/must or “may” - which is more optional.
You have to do something to test receivables and payables. In the US, receivable confirmations are compulsory. But in most other jurisdictions, the auditor has the ability to use their professional judgement to decide whether to use a subsequent cash test or confirmation. For some audit firms, it is opt-in to confirmations. In others, it is included unless you opt-out