“Explore the need for a Balance Confirmation Portal in auditing, a collaborative effort by ICAI and IBA to enhance audit integrity. Learn how it addresses challenges, reduces risks, and streamlines the external confirmation process, citing historical frauds like the SATYAM Scandal. The proposed portal aims to provide standardized, transparent, and cost-free access to information from public sector banks initially, with plans for future expansion. Stay informed about this innovative solution shaping the future of auditing.”
The balance confirmation portal is an innovation in the world of auditing designed to ease the process of audit and increase the integrity of audit evidence concerning bank balances. In the recent past, the Institute of Chartered Accountants of India (ICAI), along with the Indian Banks’ Association (IBA), has proposed the development of a Balance Confirmation portal.
The balance confirmation portal will streamline the process of obtaining external confirmations and increase the validity of such information. However, it is important to understand the need for such a portal first.
In the history of modern India, we have encountered numerous frauds. One that comes to mind is the SATYAM Scandal in 2009, perpetrated by Satyam Computer Services Ltd., which was known to have inflated its profits and assets. The relevance of external confirmation was significant in this case. The proposed portal aims to prevent such scandals in the future and ease the auditor’s process of obtaining external confirmations.
Let’s look at the audit point of view. As per SA 505, “External Confirmations,” external confirmation is obtained by the auditor as a direct written response from a third party. The external confirmation process is often relevant when addressing assertions associated with certain account balances.
Due to the absence of a standardized process for obtaining external confirmation, information is often obtained late, incomplete, and insufficient. Additionally, an organization may have bank accounts in various banks, and visiting all those banks to obtain confirmation is a time-consuming task. Sometimes auditors use third-party applications that charge money and are not authentic, thereby increasing the risk and cost of an audit. In the proposed portal, no charges will be levied on the auditor, and the responsibility of providing information will be taken by the banks, increasing the transparency of the audit and reducing audit risk.
This portal will be developed and maintained by PSB Alliance Pvt. Ltd (PSB Alliance), which will work in conjunction with the Institute for Development and Research in Banking Technology (IDRBT). The proposed platform for balance confirmation will be jointly owned by the Indian Banks’ Association (IBA) and the Institute of Chartered Accountants of India (ICAI). Initially, it will cover only public sector banks, but later it will be extended to include private sector banks and financial institutions as well.
Once the portal goes live, auditors need not worry about the risks associated with the external confirmations of account balances.
Information has been obtained from the sources below: www.moneycontrol.com, taxconcept.net, www.thehindubusinessline.com
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Addressed the need of the hour.
Thank you and yes it was indeed an interesting subject these days. I hope you enjoyed the read