The Creditor Balance Confirmation Letter For Audit Purpose is a critical document used in Hong Kong's audit process to independently verify financial obligations and outstanding balances with creditors. This document is typically issued during annual statutory audits or special purpose audits, where external auditors require third-party confirmation of reported creditor balances. It serves as an essential audit evidence under Hong Kong Standards on Auditing (HKSAs), particularly HKSA 505 regarding external confirmations. The letter is designed to capture accurate financial information, including outstanding balances, payment terms, and any discrepancies between the creditor's records and the company's books. This confirmation process helps ensure compliance with Hong Kong's Companies Ordinance (Cap. 622) requirements and supports the integrity of financial statements through independent verification.
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1. Letterhead and Date: Company letterhead of the auditor and current date
2. Recipient Details: Full name and address of the creditor being contacted for confirmation
3. Subject Line: Clear indication that this is a balance confirmation request for audit purposes, including the client company name and audit period
4. Introduction: Statement identifying the auditor, the client company being audited, and the purpose of the letter
5. Balance Details: Specific amount(s) to be confirmed, including the date of the balance and any relevant account numbers
6. Response Instructions: Clear instructions on how to confirm or dispute the balance, including where to send the response
7. Authorization Statement: Statement from the client company authorizing the creditor to release information to the auditors
8. Signature Block: Space for signatures from both the audit firm and the client company's authorized representative
1. Statement of Account: Detailed breakdown of transactions, used when there are multiple transactions or complex account history that needs confirmation
2. Disputed Items Section: Additional section for noting any disputed items or discrepancies, included when there's a history of reconciliation issues
3. Related Party Declaration: Section for declaring any related party relationships, included when there might be related party transactions
4. Confidentiality Statement: Additional privacy and confidentiality clauses, included when dealing with sensitive information or regulatory requirements
1. Schedule A - Account Details: Detailed listing of account balances and transactions if multiple accounts or complex transactions are involved
2. Schedule B - Transaction History: Chronological listing of significant transactions during the audit period
3. Appendix 1 - Supporting Documents: Copies of relevant invoices, statements, or other supporting documentation
4. Appendix 2 - Reply Form: Standardized form for the creditor to complete, confirm, and return
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Creditor Balance Confirmation Letter For Audit Purpose
A formal audit confirmation letter used in Hong Kong to verify creditor balances and financial obligations during external audits, complying with Hong Kong Standards on Auditing.
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