Yesterday, the PCAOB released a 90 page proposal on confirmations because, presumably, auditors collectively suck at using them.
If you take exception with that notion, so be it, but the Board thought that rolling out a standard was necessary to give the opiners out there some guidance so they can get a little more bang for the buck (and give interns and A1s something to do when there is absolutely nothing going on) from confirmations.
Tammy Whitehouse over at Compliance Week fills us in on some of the details:
PCAOB member Steven Harris said the proposed standard expands the use of the confirmation process by requiring auditors to confirm receivables that arise from credit sales, loans, or other transactions; cash and other relationships with financial institutions; and other accounts or balances that pose a significant risk to the financial statements. Currently, auditors are required only to verify receivables if they arise from the sale of goods or services in the normal course of business.
The standard also would relax the requirements for confirmations written on paper, reflecting advances in electronic communication. The proposal would allow auditors to use electronic media to send confirmation requests and receive confirmation responses, and it would make provisions under certain circumstances for auditors to use direct access to a third party’s records to obtain the audit evidence they need.
Throw in your 2¢ by September 13th and gird your loins for audits after Dec. 15, 2011.
PCAOB Proposes New Auditing Standard on Confirmation [PCAOB]
PCAOB Plans New Requirements for Audit Confirmations [Compliance Week]