Confirmations are letters auditors send to third parties, banks, customers, suppliers, asking them to confirm the balances or transactions on your books. They are mandatory in most audits and the trickiest part of fieldwork to coordinate.
What you'll learn
→ Bank confirmations → Customer (receivables) confirmations → Supplier (payables) confirmations → Practical tipsBank confirmations
Auditors send a standard form to each bank where you hold accounts, asking the bank to confirm: account numbers, balances at year-end, undrawn facilities, fixed deposits, signing authorities, and any liens or charges. UAE banks typically respond in 2-4 weeks.
Banks charge a confirmation fee, AED 100-500 per account is common. Some banks (Emirates NBD, ADCB) require the confirmation request on letterhead and may charge per account. Plan and budget. If you have many accounts, batch the request.
Customer (receivables) confirmations
Auditors select sample customers, typically the top 10 by balance plus a random sample, and send them a balance confirmation letter. The customer confirms the amount they owe you at year-end matches your records, or notes any discrepancy.
If a customer does not respond (common, non-response rates of 30%+), auditors fall back to alternative procedures: review subsequent payments, examine invoices and contracts. Document each non-response with the alternative procedure performed.
Supplier (payables) confirmations
Mirror process for major suppliers. The supplier confirms the balance you owe them. Useful to identify unrecorded liabilities, a supplier may say you owe AED 50K but your books show AED 30K, indicating a missing bill.
Major utility, telecom, and insurance providers in the UAE rarely respond to confirmation letters. Auditors substitute alternative procedures: examine the most recent statement, the most recent payment, and the contract.
Practical tips
Send all confirmations as early as possible, the longer the response window, the higher the response rate. Provide accurate contact details for each counterparty (the auditor cannot send blind to AP@bigcustomer.com). Follow up after 14 days for non-respondents.
Customer and supplier confirmations are sent under audit's letterhead, not yours. The auditor controls the send and the receipt. Do not handle returned confirmations, auditors maintain independence.
This guide is general information, not professional advice. For situations that involve specific facts, talk to your accountant, or hire one of ours from the marketplace.