Perform an online search for "electronic bank confirmations." Summarize in one page or less what you learn about recent developments in the use of web-based bank confirmations. Include a brief discussion of the advantages of electronic confirmations in your write-up.
What will be an ideal response?
Technology continues to improve the auditing process. Most large accounting firms have rid themselves of
paper audit work papers and paper audit programs for the benefit of having them all on a computer. One of
the newest attempts to modernize the audit process is the development of the electronic bank confirmation.
Some service firms have begun offering electronic bank confirmation services, which eliminate the old paper
confirmation that would be mailed out by the auditor and returned by the bank. There are even some banks that will now only accept electronic confirmations, refusing to fill out and return paper confirmations.1
There are several advantages of electronic bank confirmations. First, they improve efficiency. Auditors
can now connect with banks almost instantly. According to one study by the AICPA, auditors' time spent on
confirmations could be reduced by 50% by using electronic confirmations. In addition to helping auditors
become more efficient, electronic bank confirmations also are helpful to banks. These confirmations are
easier for banks to fill out and return to the auditor, which helps to increase the number of confirmations
that auditors get back. This is positive for all parties involved.
Another benefit of electronic confirmations is the reduction in the likelihood of fraud. With paper
confirmations, there is a chance that an unauthorized person will intercept the confirmation and fill it out
fraudulently. Electronic confirmations can be encrypted and sent over a secure connection to ensure that
they are received by authorized personnel, making it easier for the auditor to maintain control over the
audit confirmation process.
With the added benefits and increased efficiency and security, electronic confirmations are growing
in use. As technology and the growth of web-based systems increases, it is essential that auditors become
comfortable with these electronic procedures.
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What will be an ideal response?
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