1.) After performing any alternative procedures, the auditor should evaluate the combined evidence provided by the confirmations and the alternative procedures to determine whether sufficient evidence has been obtained about all the applicable financial statement assertions. In performing that evaluation, the auditor should consider (a) the reliability of the confirmations and alternative procedures; (b) the nature of any exceptions, including the implications, both quantitative and qualitative, of those exceptions; (c) the evidence provided by other procedures; and (d) whether additional evidence is needed. If the combined evidence provided by the confirmations, alternative procedures, and other procedures is not sufficient, the auditor should request additional confirmations or extend other tests, such as tests of details or analytical procedures. (AU 330)
Paragraph .09 of section 326, Audit Evidence, states that the auditor should consider the reliability of the information to be used as audit evidence. Confirmations obtained electronically can be considered to be reliable audit evidence if the auditor is satisfied that (a) the electronic confirmation process is secure and properly controlled, (b) the information obtained is a direct communication in response to a request, and (c) the information is obtained from a third party who is the intended respondent.
2.) During the performance of confirmation procedures, the auditor should maintain control over the confirmation requests and responses. Maintaining control means establishing direct communication between the intended recipient and the auditor to minimize the possibility that the results will be biased because the interception and alteration of the confirmation requests or responses. The possibility that results will be biased based on interception and alteration of the confirmation requests and responses, is a prospect of what can go wrong if the auditor does not maintain control over the...
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