You’re looking at your laptop computer display screen, the glow illuminating your exhausted face. It’s 2:00 AM on a Tuesday in March, the guts of busy season, and three affirmation requests have gone unanswered for 2 weeks.

One shopper’s financial institution received’t reply to your emails. One other affirmation has been intercepted, elevating pink flags about fraud. Your audit deadline is in 72 hours. After which comes the e-mail that makes your abdomen drop: a reminder out of your agency’s compliance workforce concerning the new PCAOB affirmation requirements that went into impact final December.

You’re not alone. Throughout the nation, hundreds of audit professionals are dealing with the identical excellent storm: new regulatory necessities, mounting fraud dangers, expertise shortages, and margin compression.

However right here’s what you may not know but: there’s a greater approach.

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The brand new guidelines of the sport: Why confirmations simply obtained critical 

The PCAOB raised the bar and the stakes. On December 15, 2024, the PCAOB adopted AS 2310, The Auditor’s Use of Affirmation, which redefined what “satisfactory affirmation proof” means for auditors. This new normal is efficient for audits of fiscal years ending on or after June 15, 2025.

Right here’s what you could now show:

• • Precision issues: You could establish precisely what info wants verification—no extra imprecise requests
  • The appropriate individual issues: Your confirmations should go to educated exterior supply who can present dependable responses
  • Skepticism issues: Each response, exception, and non-response have to be evaluated with heightened skilled skepticism

The message is evident. Optimistic confirmations are in; shortcuts are out. When confirmations aren’t possible or dependable, you could carry out time-consuming various procedures.

What all of this implies for you is that the times of “set it and neglect it” confirmations are over. You could show energetic administration, keep impeccable documentation, and make sure the proper persons are responding.

The fraud lens: What AS 2401 means for your affirmation technique

Whereas AS 2401 governs the auditor’s duty to detect materials misstatements as a result of fraud, its ideas prolong past planning and danger evaluation—they form the way you collect and consider audit proof. One of many core tenets of AS 2401 is the requirement to keep skilled skepticism all through the audit, particularly when evaluating the reliability of proof.

That’s the place confirmations are available in. They’re not only a routine step—they’re a important response to fraud danger as a result of they supply unbiased, third-party proof. Below AS 2401, auditors are anticipated to contemplate the authenticity and reliability of all proof, notably when fraud danger is elevated.

So, the hidden query behind each affirmation you ship is that this: Are you able to show that this proof is genuine, safe, and free from tampering?

As a result of in at the moment’s audit setting, the standard and traceability of your affirmation proof matter greater than ever.

The AICPA’s money affirmation normal

The AICPA’s current publicity draft indicators clear alignment with PCAOB requirements, notably on the subject of confirming money. Whereas the PCAOB’s AS 2310 establishes a presumptive requirement to substantiate money and accounts receivable, the AICPA is now echoing that expectation in its proposed updates.

This isn’t only a procedural suggestion. It’s heightened expectations. The publicity draft reinforces that confirmations are a default, not an non-compulsory step, particularly for high-risk accounts like money. Should you select to not affirm, you’ll want sturdy, well-documented justification.

So, what does that imply for you? Your affirmation course of have to be defensible.

If challenged, you must have the ability to clearly show why confirmations have been despatched, or why they weren’t, and the way your method nonetheless meets the usual of ample applicable audit proof.

The hidden confirmation-related prices no person talks about 

Let’s go over what occurs when your confirmations go mistaken.

When fraud strikes: The domino impact

A notable instance of audit affirmation fraud includes BF Borgers CPA PC, a U.S.-based audit agency, and its proprietor Benjamin F. Borgers. In Could 2024, the SEC charged the agency and its proprietor with widespread audit failures that impacted over 1,500 SEC filings between January 2021 and June 2023. Here’s a primary breakdown of what occurred and the influence this incident had:

• • Nature of the fraud -The agency falsified audit documentation, together with fabricated confirmations, to make it seem that audits complied with PCAOB requirements, when in reality they didn’t.
  • Violations – They didn’t:
    • • Correctly put together and keep audit workpapers.
      • Receive required engagement high quality critiques.
      • Supervise audit groups adequately.
  • Impression – Over 75% of filings that included BF Borgers’s audits throughout that interval have been discovered to be noncompliant with PCAOB requirements.
  • Penalties – The agency was completely barred from training earlier than the SEC, and penalties included $12 million for the agency and $2 million for Benjamin Borgers personally.

This case is taken into account one of many largest audit failures in current historical past and underscores the significance of genuine, traceable, and tamper-proof affirmation proof in combating fraud, straight aligning with the expectations set forth in PCAOB AS 2401.

Fraud causes time delays relating to the audit in query, in addition to future engagements and deadlines. It additionally damages the auditor’s repute and credibility, that are central to their position and troublesome to restore afterward.

The effectivity tax of handbook confirmations

Take into account how your “routine” financial institution affirmation course of usually unfolds:

• • Spend time trying to find the correct financial institution contact
  • A number of emails forwards and backwards (usually misplaced in spam filters)
  • Observe-up calls to trace down responses
  • Handbook documentation scattered throughout e mail threads
  • Coaching burden for new workers studying completely different procedures for various banks

Repeat that to-do listing for 1,500 confirmations per yr, and you’re taking a look at a complete lot of workers time spent on this piece alone. Now think about getting that course of executed in half the time.

The 4 pillars of fraud-resistant affirmation administration 

To cut back publicity and reinforce belief in your audit course of, trendy affirmation administration is constructed on 4 key pillars:

1. 1. Safety

 Shield in opposition to spoofing, interception, and impersonation with:

• • • Finish-to-end encryption
    • Verified financial institution networks
    • Direct, authenticated connections to monetary establishments

1. 2. Effectivity

 Streamlined workflows scale back the temptation to chop corners:

• • • Confirmations accomplished in days, not weeks
    • Fewer handbook steps means fewer alternatives for error

1. 3. Management

 Centralized oversight ensures nothing slips via:

• • • Actual-time monitoring of each request
    • Automated reminders and escalation paths
    • Position-based entry and approval workflows

1. 4. Audit Path

 Each motion is logged and time-stamped:

• • • Full visibility into who despatched what, when, and the way
    • Important for defending in opposition to fraud allegations or regulatory scrutiny
    • Reinforces skilled skepticism with verifiable documentation

What’s subsequent for you? The selection is evident 

What begins as your resolution to a compliance headache may develop into your aggressive benefit—a approach so that you can do extra with much less, to ship quicker, and to sleep higher at evening.

The regulatory setting is extra demanding for you. The dangers are greater. The margins are tighter. You possibly can preserve chasing emails, trying to find financial institution contacts, and hoping nothing falls via the cracks. Or you may be a part of the companies which are already working smarter.

Be taught extra about Thomson Reuters Affirmation, the one on-line affirmation service with a worldwide validated community at the moment and expertise the speedy advantages of a streamlined and safe affirmation course of that would remodel your apply.