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The ACRA Audit Regulatory Report 2024, published in November 2024, outlined key reminders for auditors when evaluating management's estimates. One area highlighted was the reliance on external confirmations for valuation of unquoted investments.
As mentioned in ACRA's report, and to provide clarity on what auditors need to consider when relying on external confirmations in specific situations, ISCA has issued Audit Bulletin (AB) 7: Considerations over External Confirmation Procedures, with the support of the Auditing and Assurance Standards Committee (AASC).
The bulletin highlights certain key considerations for the auditor when designing and performing external confirmation procedures. It illustrates how some of these considerations apply in several scenarios where external confirmation procedures are used, including:
• Obtaining confirmation from a bank in a foreign jurisdiction
• Obtaining confirmation on escrow accounts
• Relying on a confirmation for the valuation of investments in unquoted funds
ISCA is working on another bulletin that will provide deeper insight into auditing the valuation of unquoted equity investments, an area where the profession faces practical challenges in.
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