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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Other current issues

An audit team uses robotic process automation to send confirmation requests to receivables and collate replies by email. The auditor discovers the bot used customer email addresses taken from the client's master file without verification. Which weakness in the confirmation process does this most directly create under ISA 505?

The main weakness is loss of control over the confirmation process: with unverified client-supplied addresses, replies may come from someone other than the intended debtor or be intercepted. ISA 505 requires the auditor to control selection of the confirming party and the sending and receipt of requests.

  1. ARisk that responses may not come from the intended party, so the auditor loses control over the confirmation processCorrect
  2. BRisk that the sample size is too small
  3. CRisk that materiality has been set too high
  4. DRisk that the bot is not independent of the client

Explanation

ISA 505 requires the auditor to maintain control over confirmation requests, including determining the confirming party and sending requests directly. Unverified addresses from the client's file could route replies to the client or a wrong party, undermining reliability. Sample size and materiality are unrelated to this specific weakness.

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