PCAOB Proposes New Standard for the Auditor’s Use of Confirmation

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Jan 20, 2023

The Public Company Accounting Oversight Board (PCAOB) issued for public comment a proposed new standard that, if adopted, would strengthen and modernize the requirements for the auditor’s use of confirmation. Comments are requested by February 20, 2023.

To modernize the PCAOB’s confirmation standard, the proposed standard includes principles-based requirements that would apply to all methods of confirmation, including paper-based and electronic communications. The proposal, if adopted, would better integrate the PCAOB’s confirmation standard with its risk assessment standards.

The confirmation process touches nearly every audit. It involves an auditor sending a confirmation request directly to a confirming party (e.g., a financial institution), evaluating the information received, and addressing nonresponses and incomplete responses to obtain audit evidence about one or more financial statement assertions.

When properly designed and executed, confirmation can be a critical part of the evidence that auditors obtain to support their opinion regarding a company’s financial statements. A properly designed and executed confirmation can also be an important response for auditors to address fraud risks.

Detailed questions are included throughout the proposal, and commenters are encouraged to:

  1. comment on any or all topics
  2. respond to any or all questions
  3. provide feedback in areas not covered by specific questions, and
  4. provide any evidence that informs commenters’ views.

Review the proposal on the PCAOB's website.

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