Auditors triumph in clash over bank confirmations process

The Auditing Practices Board has issued a second consultation draft on ‘Bank
Reports for Audit Purposes’, which intends to introduce a protocol between banks
and auditors that will see a faster process for both parties.

Auditors have clashed with banks for years over bank confirmations, claiming
delays in receiving information from the banks on their clients’ bank accounts
could potentially lead to qualified audits.

The APB’s first consultation in 2005 on the issue became interim guidance in
2006, and was seen as moving towards a smoother process.

Protocol was initially created on bank confirmations in 1998, but failed to
speed up the process as was hoped.

The latest consultation revises the protocol, and introduces the concept of
bank request ‘templates’.

Auditors will be able to make a ‘standard’ request for information, allowing
banks to respond within a ‘normal’ timeframe of what is expected to be around a

A ‘fast-track’ request would see banks respond more speedily. An incomplete
request category, where the auditor is unable to provide all the details
required for a standard request, will be introduced too.

Banks will also have to provide more details of their preferred method of
receiving requests and details of whom the auditors should contact.

It seems all well and good, but there could be a sting in the tail yet.
Auditors have said that they could face some pain implementing an unexpected
proposal in the draft, requiring them to provide the main account number and
sort code for each legal entity named in a request.

The details of each legal entity are held in audit files, but not necessarily
within the auditors’ databases, warns Smith & Williamson technical director
Kirsty Smith.

‘They’re now saying they want details for each legal entity, we’ll have to go
back and record all that information onto a central system. Until the draft
there wasn’t any requirement to do so.’

Despite her concern, Smith sees definite advantages for auditors ‘if’ the
revised protocol works in practice: ‘It all seems like common sense, but it’s a
shame it’s taken so long.’

The British Bankers’ Association, whose members deal with 300,000 bank
confirmation requests a year, said the revision ‘will reduce processing time

‘Bank reports for audit purposes are increasingly provided through central
processing centres and auditing arrangements need to reflect this,’ says BBA
chief executive Angela Knight.

The BBA will also publish key information concerning the completion of bank
reports for audit purposes, including contact details, on its website. This
information will be made available shortly. The consultation ends on 20

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