AICPA updates audit confirmation standard

The American Institute of CPAs approved a standards update to modernize how CPAs get audit evidence via external confirmation procedures.

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The AICPA’s new Statement on Auditing Standards: External Confirmations, adds a new requirement for auditors to employ external confirmation procedures for cash and cash equivalents held by third parties unless certain conditions exist. The standard also includes updates to reflect the increasingly more prevalent use of intermediaries in external confirmation procedures. In addition, the revisions require some new conditions be met when using negative confirmations.

One of the main changes in the new standard offers guidance on directly accessing information maintained by a knowledgeable external source as a way to satisfy requirements regarding external confirmation procedures.  

“External confirmations remain a critical source of reliable audit evidence, and these updates are designed to strengthen that foundation in today’s increasingly digital and intermediary-driven environment,” said AICPA chief auditor Jen Burns in a statement.

The new standard is expected to be available in July and will take effect on Dec. 15, 2028, but early adoption will be possible.

In 2023, the Securities and Exchange Commission approved an updated audit confirmation standard from the Public Company Accounting Oversight Board that took into the increasing use of electronic audit confirmations.