AU 330: The Confirmation Process

AU-C 505: External Confirmations

AU EFFECTIVE DATE AND APPLICABILITY

Original Pronouncement Statement on Auditing Standards (SAS) 67.
Effective Date This statement currently is effective.
Applicability Audits of financial statements or other financial information made in accordance with generally accepted auditing standards (GAAS).

AU-C EFFECTIVE DATE AND SUMMARY OF CHANGES

SAS No. 122, Codification of Auditing Standards and Procedures, is effective for audits of financial statements with periods ending on or after December 15, 2012.

AU-C Section 505 supersedes AU Section 330.

The requirement to confirm accounts receivable has been moved from AU Section 330 to AU-C 330 because it is considered part of the process of determining the procedures to perform. AU-C 505 presumes that the auditor has already determined an external confirmation is the appropriate audit procedure.

AU-C 505.08 address the responsibilities of the auditor when management refuses to allow the auditor to send a confirmation request. If management refuses to allow the auditor to perform external confirmation procedures, the auditor should:

1. Inquire about management’s reasons for the refusal and seek audit evidence about their validity and reasonableness;
2. 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; ...

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