The Public Firm Accounting Oversight Board issued a Highlight publication Monday containing some observations and reminders for auditing corporations about counting on outdoors service suppliers for digital audit confirmations.
Many corporations flip to third-party service suppliers to ship and obtain digital audit confirmations to and from “confirming events,” together with banks, monetary establishments, funding and brokerage corporations, and legislation corporations. The brand new publication consists of some observations from PCAOB workers about how corporations are leaning on such suppliers and suggests procedures for auditors to comply with as they plan and carry out audits. In some instances, auditing corporations could also be relying too closely on such outdoors corporations.
“We noticed various practices associated to the procedures auditors carry out to help such reliance,” mentioned the PCAOB. “In some instances, audit corporations weren’t giving any consideration to help whether or not, as required by PCAOB requirements, the auditor maintains management over the affirmation requests and responses in audits the place a service supplier is used to ship and obtain confirmations.”
The publication identified that the requirement to take care of management over the affirmation course of is essential to ensure affirmation responses are dependable.
“Audit corporations that use a service supplier to ship and obtain confirmations depend on the service supplier’s help in sustaining management over the affirmation requests and responses,” mentioned the doc. “These service suppliers use their very own processes and controls in speaking the auditor’s affirmation request to, and acquiring responses from, the confirming celebration. Due to this fact, it’s essential for auditors to find out that they’ll depend on the service supplier’s processes and controls when establishing direct communication between the auditor and the confirming celebration.”