Positive confirmation request
Positive confirmation is an auditing inquiry that requires the customer to
respond, confirming the accuracy of an item. Positive confirmation requires
proof of accuracy by affirming that the original information was correct or by
providing the correct information if incorrect.
Positive confirmation is part of the confirmation procedures that auditors
use to confirm specific pieces of information. The letter's recipient is to reply to
confirm the accuracy or supply information and send it back to the auditor.
Some examples of the information required from auditors include confirming
the following:
- the amounts and descriptions of various types of liabilities;
- bank account information including balances;
- inventory amounts and types;
- investments or securities;
- copies of sales invoices to ensure sales were made;
- information or copies of shipping invoices to ensure products were
shipped [Kenton, W.].
A positive external confirmation request asks the confirming party to reply
to the auditor in all cases, either by indicating the confirming party's agreement
with the given information or asking the confirming party to provide
information. A response to a properly designed positive confirmation request
ordinarily is expected to provide reliable audit evidence. A risk exists, however,
that a confirming party may reply to the confirmation request without verifying
that the information is correct. The auditor may reduce this risk by using
positive confirmation requests that do not state the amount (or other
information) on the confirmation request and that ask the confirming party to
fill in the amount or furnish other information. On the other hand, use of this
type of "blank" confirmation request may result in lower response rates because
additional effort is required from the confirming parties to provide the requested
information [External confirmations, p. 610].
Kenton, W. (2010). Positive Confirmation: Definition, Examples, Vs. Negative. Investopedia. Retrieved from: https://www.investopedia.com/terms/p/positive-confirmation
AICPA. (2000). External confirmations. New York: International Federation of Accountants. Retrieved from: https://us.aicpa.org/content/dam/aicpa/research/standards/auditattest/downloada bledocuments/au-c-00505.pdf