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What is vouching and what is tracing? Why is inquiry alone usually insufficient audit evidence? What factors affect the reliability of audit evidence? What is the difference between tests of controls and substantive procedures? What is the difference between a test of details and a substantive analytical procedure? What are subsequent events and how does the auditor address them? What is a management representation letter and what is its purpose? What is cutoff testing and why is it important? What is reperformance and how does it differ from recalculation? What is directional testing?
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What is external confirmation and when is it used?

Intermediate

Answer

External confirmation is audit evidence obtained as a direct written response to the auditor from a third party (in paper or electronic form). It's highly reliable and commonly used for bank balances, accounts receivable, loans, and legal matters. Positive confirmations request a reply in all cases; negative confirmations ask for a reply only if the recipient disagrees.
Real-world example The auditor sends positive confirmations to major customers to verify the existence and amount of receivables.

Common follow-ups: Positive vs negative confirmation? | Why is confirmation highly reliable?

Audit Sampling Analytical Procedures Audit Evidence & Procedures
All 18 Audit Evidence & Procedures questions