ACCA Audit and Assurance (F8) Practice Exam

Which step is NOT involved in the process of confirmations?

1. Auditor sends confirmation

2. Auditors directly receive the confirmation

3. Client prepares confirmations

4. Auditors prepare confirmations from their records

The correct answer is: Auditors prepare confirmations from their records

In the confirmation process, auditors often seek to verify the existence, accuracy, and completeness of certain financial information by obtaining direct responses from third parties. This involves a systematic approach to ensure the reliability and validity of the data. When auditors prepare confirmations, they typically prepare requests that will be sent to third parties such as banks or customers. However, auditors do not prepare confirmations using their own records to send out. Instead, the confirmations should be sent out directly to third parties, who then respond back to the auditors. This practice maintains objectivity, as it ensures that the information obtained comes directly from the source being confirmed rather than being influenced by the client's input. As for the steps involved, sending confirmations (a) is a main action taken by auditors to obtain direct responses. Auditors receiving the confirmations (b) is also crucial, as it ensures they have direct access to the information. Involving the client in preparing confirmations (c) can be part of the process in terms of ensuring that the content is relevant; however, the integrity of the confirmation must rely on the third-party responses.