The Independent Regulatory Board for Auditors (IRBA) recently issued the new South African Audit Practice Statement 6 – External Confirmations from Financial Institutions. The new SAAPS 6 introduces a new format for auditors to follow when performing external audit confirmations. The new statement also explains the new method for an auditor to request and obtain an electronic external confirmation.
In the light of this new SAAPS 6 and considering current challenges faced by auditors and banks with the manual confirmation process, the major SA South African banks have indicated that they would like to start to move away from the current paper-based process towards an electronic process called Confirmation.com. A number of banks have already started accepting electronic confirmations and have communicated that as from 1 April 2014 they will no longer accept manual paper-based confirmations, but only electronic confirmations. Of the four major banks, Standard Bank and FNB have already switched to the new system while Nedbank and ABSA are in the process of doing so.
IRBA has expressed the view that electronic confirmation provides greater assurance for this interactive process, provides more reliable audit evidence, reduces auditors’ risk of fraud, reduces audit clients’ risk of fraud, and is in line with international best audit practices. There are other countries in the world that have enjoyed the proven benefits and advantages of this type of approach for several years already.
What is Confirmation.com?
Confirmation.com is a single, secure, web-based platform that allows authenticated audit firms to effectively manage and control the audit confirmation process, both internally and directly with authenticated financial institutions. This streamlines the process, improves efficiencies and reduces fraud risk for both auditors and audit clients.
Why has the audit and banking industry adopted this electronic confirmation process?
Currently, auditors, banks and their shared clients are faced with a number of challenges when it comes to the manual paper-based process.
Among the main challenges are:
How does Confirmation.com benefit both auditors and audit clients?
How will an audit client now provide electronic authorisation to allow the auditors to send electronic confirmations to a bank?
Cost implications of Confirmation.com
(i.e. if you send 10 forms to one bank for a client audit date, you will only be charged for the first five forms at R213 per form and any forms over and above the first five will be charged at R0.)
In an attempt to save our clients the additional costs brought about by this new, compulsory process, we have attempted to request all confirmations for year-ends up to February 2014 on the old manual system instead of through Confirmation.com. However, from 1 April we will be obliged to use the new process for all new requests for year-ends of March 2014 onwards.
We would like to urge our clients to respond timeously to all requests from our office for the completion of the necessary documents pertaining to this matter. If you wish to discuss this in more detail your are welcome to contact your responsible director or Christa Swart at firstname.lastname@example.org or 021 840 1600.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.