What are audit confirmations, and why does the auditor write to my bank?

What they are An external confirmation is a reply the auditor gets directly from a third party, such as a bank, customer, supplier or lawyer, about a balance or term. HKSA 505 sets the rules.

Why they matter

• Evidence obtained directly from an independent source is generally regarded as more reliable than records the company produced itself.
• Banks confirm balances, loans, guarantees and securities. HKICPA provides a standard bank confirmation request form and local guidance in the standard's appendices.

What you need to do

• Sign the authority so the bank can reply to your auditor.
• Give a complete list of every bank account, including accounts closed during the year.
• Tell the auditor about customers or suppliers who may need to confirm balances.

If you object If management refuses to let the auditor send a confirmation request, the auditor asks for the reasons and considers the effect on the audit. Refusal without a convincing reason can lead to a qualified opinion or a disclaimer.

Timing Banks take time to reply, and it is usually a critical-path item, so give authority early.

Digital or paper formats vary by bank; ask your auditor which route they use.