Question

What is the primary purpose of a bank confirmation? Why does the auditor confirm the bank balance in addition to agreeing the year-end bank balance to the bank statement? What additional information is included with a standard bank confirmation?

Answer 1

The primary purpose of confirmation is to verify the actual cash balance with bank balance .

Auditor Check whether the client have prepared the bank reconciliation accurately and compare it with the bank balance and actual cash in the bank except deposit in transit, outstanding cheque etc.simply the auditor verify the reconcile item of clients year end bank reconciliation.

Standard bank confirmation includes information about liabilities of Bank for notes, mortgage,debt which includes interest of loan,date of loan,due date etc.the bank confirm loan information and bank balance on the same form.