Ministry of Justice
On January 31, 2019 No. 53639
Appendix No. 18
to the Order of the Ministry of Finance of the Russian Federation of January 9, 2019 No. 2n
The International Standard of Audit (ISA) 505 "External confirmations" should be considered together with MCA 200 "Main objectives of the independent auditor and carrying out audit according to International standards of audit".
Scope of this standard
1. This International Standard of Audit (ISA) establishes procedure for use by the auditor of procedures of external confirmation for the purposes of receipt of auditor proofs according to requirements of MCA 330 <1> and MCA 500 <2>. This standard does not extend to the requests concerning claims and legal proceedings which are considered in MCA 501>.
<1> MCA 330 "Audit procedures in response to the estimated risks".
<2> MCA 500 "Auditor proofs".
<3> MCA 501 "Features of receipt of auditor proofs in specific cases".
Procedures of external confirmation for the purposes of receipt of auditor proofs
2. In MCA 500 <4> it is specified that impact the source of obtaining and nature of proofs, and also circumstances of their obtaining exert on degree of reliability of auditor proofs. This standard also includes the following generalization applicable to auditor proofs <5>:
<4> MSA 500, Item A5.
<5> MSA 500, Item A31.
- auditor proofs are more reliable if they are received from independent sources outside the organization;
- the auditor evidence obtained by the auditor directly is more reliable, than the auditor evidence obtained indirectly or on the basis of the drawn conclusions;
- auditor proofs are more reliable if they are drawn up in document type on paper, electronic or other medium.
Therefore, depending on circumstances of audit, auditor proofs in the form of the external confirmations received by the auditor directly from the confirmatory parties can be more reliable in comparison with the proofs prepared by the organization. This MSA is urged to help auditors with development and holding procedures of external confirmation for the purposes of receipt of pertinent and reliable auditor proofs.
3. Other MSA recognize the importance of external confirmations as auditor proofs, for example:
- In MCA 330 <6> responsibility of the auditor for development and realization of general measures in response to the estimated risks of essential misstatement at the level of the financial reporting, and also for development and carrying out further audit procedures, nature which terms and amount are determined on the basis of the estimated risks of essential misstatement at the level of prerequisites is discussed. Besides, MCA 330 <7> specifies that irrespective of the estimated risks of essential misstatement the auditor shall develop and perform concerning each material class of transactions, account balance and disclosure of information procedures of check in essence. The auditor also shall decide whether it is necessary to perform in essence as audit procedures of check procedures of external confirmation.
<6> MSA 330, Items 5 - 6.
<7> MSA 330, Items 18 - 19.
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