AuditConfirmations Fraud Monitoring

How is the confirmation responder verified?

Preventing fraud in confirmation procedures, like any other audit procedures, is accomplished by implementing layers of controls in the confirmation process.

Automated confirmations are done by making secure, direct connection to the required financial institution’s banking systems. All response information is therefore provided directly by the confirming entity with no opportunity for manipulating the process.

For standard electronic confirmations, AuditConfirmations.com provides two major controls in the confirmation process, direct delivery and verification of response authenticity. First, using AuditConfirmations ensures that each confirmation is delivered directly to the auditor-approved confirmation responder. Second, AuditConfirmations uses an extensive set of analytical monitoring tools that monitor all aspects of the response process. We do not disclose the details of these monitoring tools in order to make subverting this fraud control extremely difficult, however any suspicious activity is reported to the auditor within hours of its occurrence so the auditor may adjust their procedures as necessary.

What is the auditor’s responsibility in preventing fraud?

The auditor should provide two key controls in the confirmation process using AuditConfirmations, just like when performing paper-based confirmations. First, the auditor should review and approve the delivery address of the confirmation responder (the system forces the auditor to do this). Second, the audit team should perform a review of the completed confirmations (as they should for any other work papers). A complete audit log is included of the activity associated with each confirmation to give the reviewer better insight into the procedures performed.

What is AuditConfirmations responsibility in preventing fraud?

AuditConfirmations provides key controls around appropriate delivery of confirmations and analytical monitoring of responses for suspicious activity to verify response integrity. These key controls are not provided by the standard paper-based confirmation process, making electronic confirmations a much stronger audit procedure.

Does the AuditConfirmations process meet the requirements for fraud prevention in the authoritative audit guidance on confirmation procedures?

Yes. The key controls in the AuditConfirmations confirmation process meet the standards set forth in the guidance and dramatically exceed those in even the best paper-based confirmation process that has been used in financial statement audits for many, many years.