On Application Of Confirmation Procedure In Financial Statement Audit

Confirmation procedure is one of the important procedures widely used in the audit of financial statements,and it is also one of the procedures lacking of standard operation in the audit practice.Effective implementation of confirmation procedure can obtain reliable audit evidence from external independent sources to improve the quality of audit.In recent years,financial fraud scandals such as fictitious transactions of listed companies,layers of hidden related parties and transactions are common,while auditors fail to effectively detect and timely expose these frauds,resulting in frequent audit failures.Many audit failures often involve improper implementation of confirmation procedures,such as the recent Jinya Technology incident,which not only exposed the non-standard operation of auditors in the implementation of confirmation procedures,but also revealed the shortcomings of the audit system and the audit process.The perfect confirmation audit procedure is not only a necessary precondition to ensure the auditors to obtain appropriate audit evidence,but also an important factor to ensure the completion of the audit work.Therefore,the confirmation procedure needs to be constantly optimized and improved,which is an inevitable requirement for standardizing the professional behavior of auditors and guarantee the work effect,as well as an objective requirement for improving the audit process of accounting firms.This paper adopts the case study method to take the improper confirmation procedure of A accounting firm auditing the 2017 financial statements of X company as an example to conduct research.Firstly,based on the related cases of accounting firms punished by the CSRC from early 2008 to the end of 2018,this paper analyzes the application status of the confirmation procedure of accounting firms in the audit of financial statements in China,through sorting out,it is found that there are defects in the selection of confirmation objects,the control process of confirmation and the processing after the reply.Secondly,taking the2017 annual financial statement audited by A accounting firm as an example,this paper describes the specific process and existing problems of the implementation of the confirmation procedure,and analyzes the reasons for the improper confirmation procedure from the three aspects of the audit institution,the auditee and the confirmer.Finally,according to the results of the case study,some suggestions are given to optimize the confirmation procedure.May be the innovation of this paper lies in: first,taking the audit of X company by A public accounting firm as a case study and combining with my internship experience,this paper aims to reveal the problems existing in the implementation of the confirmation procedure in the audit of financial statements in recent years.Starting from the real reliability requirements of the confirmation procedure and combining theory with practice,this paper is more in line with the needs of current research.Second,this paper analyzes the causes of problems in the implementation of the confirmation procedure of certified public accountants from three aspects: accounting firm,auditee and confirmer,and adopts multiangle argumentation to support the discussion of research problems.Third,combining with the information era and the general trend of audit informatization,this paper puts forward suggestions on constructing an "Internet+ confirmation" platform and implementing electronic confirmation.