Negative confirmation is not popular because auditors sometimes cannot ensure the completeness of the information sent. Negative confirmation is required suppliers to review the information and then respond bank to auditors only if the information in the confirmation is incorrect. Positive confirmation is required suppliers to review the information, complete the form, and then respond directly to auditors whether or not the information is correct.
Related article What is An Analytical Procedure?: Definition, Use, and Types One is positive confirmation, and the second is negative confirmation. Normally, there are two main types of confirmation that auditors could use to perform AP confirmation. This is to make sure that the auditor received the correct information. Those creditors then send back the confirmation to auditors directly. This is to ensure that the information is delivered to those creditors correctly. Once the confirmations are signed, then auditors need to process the confirmation to the clients’ suppliers. This is normally the General Manager or CFO of the entity. Once the confirmation is reviewed, then those drafts need to sign authorized by management in the entity that has enough authority to sign on the form. In most cases, auditors perform bank and account receivable confirmation.īut, if auditors want to obtain confirmation from third parties about the information related to account payable, then probably the auditor needs to have the control that the control or documents related to the recording of account payable are not reliable.Īuditors normally prepare account payable confirmation, and then the draft of confirmation will then be sent to the client for review. It is not normal that auditors perform account payable confirmation to suppliers. It shows the current liabilities that the entity owes its suppliers.
Those could be included in the outstanding balances and transactions.Īccount payable is the current liabilities recorded by the client in financial statements as of the reporting date.
Account payable confirmation is the confirmation prepared and processed by auditors to cross-check the amount and information between the client’s records and the client’s supplier’s records.
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