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CA Intermediate · Auditing and Ethics · Audit Evidence

Auditor CA Meera is auditing Kaveri Foods Ltd. The company's bank balance appears in the books at ₹48 lakh. Management asks her to accept the bank statement copy that the company's accountant scanned and emailed her. Considering SA 505 on external confirmations, what is the most appropriate response?

She should send a confirmation request herself and have the bank reply directly to her. SA 505 requires the auditor to control the process, so evidence does not pass through management, who could alter a scanned statement or influence the response.

  1. AAccept the scanned copy because the bank statement is an external document
  2. BObtain a confirmation request sent by her and returned directly to her by the bankCorrect
  3. CRely on the management representation letter instead of any bank evidence
  4. DAsk the accountant to confirm by telephone that the scan is accurate

Explanation

SA 505 requires the auditor to maintain control over the confirmation request and response, so the bank replies directly to the auditor. A scan routed via the client has passed through the entity and could be altered. A representation letter or the accountant's phone call is not independent evidence.

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