What is a bank confirmation?
Bank confirmation is the audit procedure. It allows to test the existence, accuracy and the ownership of banks account and bank balance of entity.
When needing a bank confirmation?
Entrepreneurs need the confirmation during the interim audit rather than at the completion stage. The auditors review the bank balance and select some important accounts to be confirmed. Auditors draft the confirmation and the send to client review and get the confirmation signed.
Once the confirmation signed, auditors is the one who proceeds the confirmation to banks. The bank confirmation is normally the positive confirmation and all the confirmations are responding to auditors.
What to be aware of when signing a bank confirmation?
The denial is common. As you may involve some careless mistake. In other words, No worry, if you aware of the minor, common mistake. Then everything is going to alright. Yet, we are going to highlight some common mistakes as below:
Authorisation Signature and Chop
- Irregular Signature
- Irregular Company chop
- Incomplete stamp
- Lack of signature
- Irregular or lack of signature of the account which deduct bank charge
- Correction without an authorization signature
- Not specify the period of bank confirmation
- Incomplete / Lack of auditor information
- Requested bank confirmation period over 7 years
- No record with the bank
- Posted-date bank confirmation period
- Not an existing client of bank
- Service for Corporate client
- Name of bank confirmation is different from Bank account
In general, the banks will charge an admin fee from Hk$300 to HK$800 per document . So, once you found there is a mystery transaction of a few hundreds deducted from your company bank account.with the description stating audit fee. Then this is a bank fee for the confirmation.
You may want to read: CHECKLIST FOR ACCOUNTING AND AUDITING IN HONG KONG