PSA-505 - Auditing Standards and Practices Council...

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Philippine Standard on Auditing 505 EXTERNAL CONFIRMATIONS Auditing Standards and Practices Council
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PSA 505 PHILIPPINE STANDARD ON AUDITING 505 EXTERNAL CONFIRMATIONS CONTENTS Paragraphs Introduction 1-6 Relationship of External Confirmation Procedures to the Auditor’s Assessments of Inherent Risk and Control Risk 7-11 Assertions Addressed by External Confirmations 12-16 Design of the External Confirmation Request 17-19 Use of Positive and Negative Confirmations 20-24 Management Requests 25-27 Characteristics of Respondents 28-29 The External Confirmation Process 30-35 Evaluating the Results of the Confirmation Process 36 External Confirmations Prior to the Year-End 37 Effective Date 38 Acknowledgment 39-40
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PSA 505 Philippine Standards on Auditing (PSAs) are to be applied in the audit of financial statements. PSAs are also applied, adapted as necessary, to the audit of other information and to related services. PSAs contain the basic principles and essential procedures (identified in bold type black lettering) together with related guidance in the form of explanatory and other material. The basic principles and essential procedures are to be interpreted in the context of the explanatory and other material that provide guidance for their application. To understand and apply the basic principles and essential procedures together with the related guidance, it is necessary to consider the whole text of the PSA including explanatory and other material contained in the PSA not just the text which is black lettered. In exceptional circumstances, an auditor may judge it necessary to depart from a PSA in order to more effectively achieve the objective of an audit. When such a situation arises, the auditor should be prepared to justify the departure. PSAs need only be applied to material matters. The PSA issued by the Auditing Standards Practices Council (Council) are based on International Standards on Auditing (ISAs) issued by the International Auditing Practices Committee of the International Federation of Accountants. The ISAs on which the PSAs are based are generally applicable to the public sector, including government business enterprises. However, the applicability of the equivalent PSAs on Philippine public sector entities has not been addressed by the Council. It is the understanding of the Council that this matter will be addressed by the Commisson on Audit itself in due course. Accordingly, the Public Sector perspective set out at the end of an ISA has not been adopted into the PSAs.
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PSA 505 Introduction 1. The purpose of this PSA is to establish standards and provide guidance on the auditor's use of external confirmations as a means of obtaining audit evidence.
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PSA-505 - Auditing Standards and Practices Council...

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