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Do auditors need to obtain a bank confirmation every year for an SMSF?

Open uri20170510 32134 7ezpi6?1494421819 jaggu asked about 3 years ago

Do auditors need to obtain a bank confirmation every year for an SMSF?

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4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

No. The decision whether or not to obtain a bank confirmation should be based on the circumstances of each individual engagement. Each engagement is different. It is therefore up to you to exercise your professional judgement and carefully consider the circumstances relevant to the individual engagement when determining whether or not to obtain a bank confirmation. ASA 505 External Confirmations includes requirements for auditors who are using confirmation but does not mandate that they are obtained for every engagement.

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 lochan answered about 3 years ago

A bank confirmation or a bank audit request assists auditors in obtaining third party, independent confirmation over year end balances held, covenants in place, accounts opened or closed during the year or other liabilities owing to the bank. Auditors need to form an opinion on the fairness of the financial statements and the compliance of the fund. Each individual auditor will use their professional judgement in deciding whether or not they have collected sufficient appropriate audit evidence to form an opinion. Guidance Statement GS 016-Bank Confirmation Requests (Auditing and Assurance Standards Board) provides auditors with guidance on how to go about obtaining audit evidence of the clients’ bank accounts and transactions. If you’ve thought to yourself, I’ve already provided my accountant or auditor with all the bank statements and information requested, why do they need more information, then refer to paragraph 13 of GS 016. ‘Where banking activities are significant, complex, or unusual and may impact on the assertions or disclosures regarding the banking activities the auditor would ordinarily request a bank confirmation (s). Thanks

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 CA Sandeep Bohra answered about 3 years ago

Dear Friend, No. The decision whether or not to obtain a bank confirmation should be based on the circumstances of each individual engagement. Each engagement is different. It is therefore up to you to exercise your professional judgement and carefully consider the circumstances relevant to the individual engagement when determining whether or not to obtain a bank confirmation. ASA 505 External Confirmations includes requirements for auditors who are using confirmation but does not mandate that they are obtained for every engagement. Where banking activities are significant, complex, or unusual and may impact on the assertions or disclosures regarding the banking activities the auditor would ordinarily request a bank confirmation(s). A banking confirmation may not be required where: -the banking activities are simple or straightforward; and -the auditor has assessed the risks of material misstatement of bank‑related balances and disclosures as low; and -there are other means to obtain sufficient appropriate audit evidence in respect of banking activities. If a bank confirmation is not obtained, the auditor must obtain sufficient appropriate audit evidence about the banking activities from other sources. Paragraph 15 gives examples of alternative sources of evidence.

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Open uri20170510 32134 1uwcnoc?1494421631 Shubhangi Jain answered about 3 years ago

A bank confirmation can be a useful tool to assist auditors in confirming year end balances, existence of covenants and/or other deposits or accounts. The question is should auditors be obtaining bank audit certificates as a matter of course. A bank confirmation may not be required for each and every SMSF. The decision as to whether or not to obtain a bank audit certificate should be based on the circumstances of each individual SMSF. Fundamentally, for every audit, auditors need to form an opinion on the fairness of the financial statements and the compliance of the fund. While it is expected certain audit activities are conducted, ultimately the auditor makes the decision for themselves based on the circumstances of individual engagements as to whether or not they have enough evidence to form an opinion. The Auditing and Assurance Standards Board (AUASB) has provided guidance in Guidance Statement GS 016 - Bank Confirmation Requests on the enquiry and confirmation methods for obtaining audit evidence regarding an entity’s bank accounts and transactions. Specifically paragraph 13 of GS 016 indicates that where banking activities are significant, complex, or unusual and may impact on the assertions or disclosures regarding the banking activities the auditor would ordinarily request a bank confirmation(s). Some examples of when an auditor may deem it necessary to seek a bank confirmation include: an SMSF that is a new client and very little is known about the client’s transactions The SMSF has recently purchased/sold a property and confirmation of large transactions are required including settlement amounts, legal costs etc The SMSF client has provided incomplete audit documentation such as missing bank statements and the auditor is unable to confirm the year-end cash balance In considering compliance with superannuation legislation and regulations, auditors need to ensure that the audit evidence obtained can also assist in clarifying significant matters such as whether the bank account has gone into overdraft during the year or whether it is being held in the correct name. Paragraph 14 of GS016 states that an auditor may decide not to request a bank confirmation where an SMSF’s banking activities are simple and straightforward, the assessed risk of material misstatement of bank related account balances and disclosures is low and other means are available to obtain sufficient appropriate audit evidence in respect of banking activities. For example, where you have an SMSF client whom you have audited for many years, who has consistently provided you with all the relevant and complete supporting documents and holds basic investments you may deem that a copy of all the bank statements for the year is sufficient in order to satisfy your professional obligations in issuing an audit opinion in relation to that fund. Each circumstance and fund is different. It is therefore up to the individual auditor to exercise their professional judgement and carefully consider the circumstances of their client recognising that they may be able to obtain sufficient appropriate audit evidence on which to base their opinion without the need for a bank confirmation.

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