Background- Positive Confirmations:
Before we perform our audit of Simply Soup Inc.’s cash balance, the audit associate examined the bank reconciliation statement established by the client, and the test shown some supports for the management assertions to the cash balances of the company. Although the test shown some support evidences for the cash balances of Simply Soup Inc., it’s more reliable to test support documents from external sources. Therefore, we have to request the cash confirmation from the third party. On October 30th, 2015, we sent and received the cash confirmation which was the positive confirmation for Simply Soup Inc. The purpose for sending positive confirmation is that we want the recipient to respond whether the recipient's records do or …show more content…
This positive cash confirmation involved auditors, Simply Soup Inc., the client, and the independent third-party, banks, so it is more reliable to test if the statements that prepared by Simply Soup Inc. are free of material misstatement or management frauds. We do not use negative cash confirmation for our cash confirmation because it requires the recipient to respond only if the recipient find a discrepancy. Also, this particular type of confirmation is normally used when the risk of material misstatement is low, and very few errors occurred in the past. In order to complete our cash confirmation for our client, Simply Soups Inc, we added the accounts for four banks, which are Fifth Federal Bank, Sparkasse-Frankfurt Bank, American Northwest Bank, and BNY Federal Bank, and we requested them to confirm the cash balances for Simply Soup Inc. However, We have to ask our client to authorize for us first before we can request the cash balances from the independent third party. After we received the authorization code from Simply Soup Inc., we did the initiate confirmations for
Before we perform our audit of Simply Soup Inc.’s cash balance, the audit associate examined the bank reconciliation statement established by the client, and the test shown some supports for the management assertions to the cash balances of the company. Although the test shown some support evidences for the cash balances of Simply Soup Inc., it’s more reliable to test support documents from external sources. Therefore, we have to request the cash confirmation from the third party. On October 30th, 2015, we sent and received the cash confirmation which was the positive confirmation for Simply Soup Inc. The purpose for sending positive confirmation is that we want the recipient to respond whether the recipient's records do or …show more content…
This positive cash confirmation involved auditors, Simply Soup Inc., the client, and the independent third-party, banks, so it is more reliable to test if the statements that prepared by Simply Soup Inc. are free of material misstatement or management frauds. We do not use negative cash confirmation for our cash confirmation because it requires the recipient to respond only if the recipient find a discrepancy. Also, this particular type of confirmation is normally used when the risk of material misstatement is low, and very few errors occurred in the past. In order to complete our cash confirmation for our client, Simply Soups Inc, we added the accounts for four banks, which are Fifth Federal Bank, Sparkasse-Frankfurt Bank, American Northwest Bank, and BNY Federal Bank, and we requested them to confirm the cash balances for Simply Soup Inc. However, We have to ask our client to authorize for us first before we can request the cash balances from the independent third party. After we received the authorization code from Simply Soup Inc., we did the initiate confirmations for