Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB Rulemaking Docket Matter No. 028: PCAOB Release No. 2010-003, Proposed Auditing Standard Related to Confirmation and Related Amendments to PCAOB Standards

The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided comments on the PCAOB Rulemaking Docket Matter No. 028: PCAOB Release No. 2010-003, Proposed Auditing Standard Related to Confirmations and Related Amendments to PCAOB Standards. The Board has done a good job of defining a confirmation to incorporate electronic responses. The Committee believes that the objective is too generic to be useful. The objective of the auditor is to perform confirmation procedures, including designing confirmation requests and evaluating confirmation responses, when required or appropriate to obtain relevant and reliable audit evidence. The Committee believes that the elimination of the exceptions for confirming receivables in AU Sec. 330 needs further clarification. The statement leaves auditors unclear as to whether ineffectiveness can be used as a basis for not sending confirmations. Based on the example, it can be inferred that if the auditor has identified a significant risk, the auditor should confirm the amounts and terms of significant transactions, including whether there are any other undisclosed oral or undisclosed written modifications to those agreements.