The Purposes And Content Of Bank Confirmation Letter In An Audit Work

• To obtain confirmation of all bank balances of the company at year end
• To ascertain any interest or charges to be accrued at the year end
• To ascertain the existence of any assets held by the bank on the client’s behalf and whether any assets have been charged to the bank
• To assist in ascertaining the existence of any contingent liabilities
• To obtain details of all bank accounts which were in existence during the accounting period

Contents In A Bank Confirmation Letter

The content of the confirmation letter should be in accordance with the format agreed with the clearing banks and should include the following:

· Details regarding the client’s permission to approach the bank;

· Requests for details of all bank balances, together with details of accounts closed during the year;

· Request for details of any interest or charges accrued but not charged;

· Request for details of any loans, overdraft and facilities, together with the limits and if applicable dates of repayments;

· Request for details of any assets held by the bank on the customer’s behalf and of any assets charged to the bank

· Request for details of any contingent liabilities of which the bank may be aware

· Details of the existence of any other banking relationships with the company of which the recipient bank may be aware.