What is an Accountant's Letter?
As a commonly used procedure and method in audit, inquiry includes verification and confirmation. Inquiry is the method by which auditors make written or oral queries to relevant personnel to obtain audit evidence. Correspondence refers to a method by which an auditor sends a letter to a third party to corroborate matters contained in the audited unit's accounting records.
Letter of inquiry
- Inquiry is the method by which auditors make written or oral queries to relevant personnel to obtain audit evidence.
- 1. Distinguish the bank balance inquiry and bank balance inquiry.
- An enterprise verification letter is a type of verification letter sent by an enterprise to a correspondent entity in order to verify the authenticity of the transaction amount during the property inspection.
- It is common that the accountant needs to check the balance of the account with the bank during the year-end audit. If this is the case, the bank will of course issue it based on the actual account balance of the bank. Some banks charge stamps on the confirmation letter.
- Classification of inquiry letters [1]
- According to the different witnesses, the inquiry letter can be divided into:
- 1. Bank confirmation letter: a confirmation letter issued to the deposit bank and the borrowing bank of the auditee to check the balance and existence of the bank deposit of the auditee on a specific date (generally the balance sheet date, the same below) And ownership, and the balance, completeness, and valuation of borrowings. A complete bank inquiry letter generally includes: deposits, borrowings, account cancellations, entrusted deposits, entrusted loans, guarantees, acceptance bills, discount bills, collection notes, letters of credit, foreign exchange contracts, depositary securities, and other major matters.
- 2. Enterprise letter of confirmation: A letter of confirmation issued to the creditors and debtors of the auditee to check the existence and rights or obligations of the creditor's rights or debts of the auditee on a specific date. Corporate inquiry letters usually include the balance of current transactions between the two parties as of a specific date.
- 3. Attorney's letter of inquiry: A letter of inquiry issued to the lawyer providing legal services to the auditee and the law firm where he is located to check whether the auditee has any pending lawsuits on a specific date and the possible Impact and settlement of attorneys' fees.
- 4. Other confirmation letters: confirmation letters issued to other institutions such as insurance companies, stock exchanges, or government departments to check the terms of the insurance contract, the tradable securities or the registered capital of the auditee .
- According to the requirements of the reply letter, the enterprise inquiry letter can be divided into:
- 1. Positive Confirmation : Regardless of the record of the confirmation letter, the respondent is required to reply.
- 2. Negative Confirmation : When the record of the confirmation letter is consistent with the record of the person being questioned, the letter will not be returned, and only when the record of the letter of confirmation letter is inconsistent with the record of the person being questioned. Passive confirmation letters should only be used if the following conditions are met:
- The risk assessment of material misstatement is low;
- Involves a large number of accounts with small balances;
- No significant misstatements are expected;
- There is no reason to believe that the interviewee did not take the letter seriously.
- Examples of confirmation letters
- Letter of inquiry
- Date: Index number:
- Dear Sirs:
- ×× Certified Public Accountants is a certified public accountant commissioned by the unit to audit its accounts. During its regular audit of its own accounts, it intends to prove that the company has the following balances owed or owed to your company:
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- If the above amount matches your company's account, please sign in the space below. If there are differences, please list the real numbers on the back and sign them.
- If the above accounts have been settled after the deadline, please return this certificate by mail.
- Please complete this form and fax it directly to the certified public accountant (Fax No .: ××××), put the original form in a reply envelope, and send it directly to your accountant, ×× accounting firm, ×× City XX District XX Road XX No. XX Building XX Building, Zip Code: XX ××, Telephone: XX ×××. As its audit of the unit's accounts.
- Please confirm the amount owed and provide a detailed statement.
- Sincerely, (seal)
- I have confirmed that the above amount is consistent with the company's accounts
- confirmed