External confirmation procedures defined by the ISA-505 (International Standard on Auditing) allow the auditors to obtain audit evidence in accordance with the requirements of ISA 330 and ISA 500. External confirmation means audit evidence is obtained as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic means.
They are frequently used in relation to account balances and their components such as Bank balances, accounts receivable balances or accounts payable balances, but they may also be used in other cases. For example, confirmation letters can be sent to a company’s lawyers to determine whether there’s any pending litigation that needs to be reported, or disclosed in the company’s audited financial statements.
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