Standard Letter of Request for Information From Banks/Finance Companies for Audit Purposes

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1 Issued May 1990 Auditing Technical Release Standard Letter of Request for Information From Banks/Finance Companies for Audit Purposes The Malaysian Institute of Certified Public Accountants (Institut Akauntan Awam Bertauliah Malaysia

2 AUDITING TECHNICAL RELEASE 2 Standard Letter of Request for Information from Banks/Finance Companies for Audit Purposes Introduction 1. Paragraph 10 of the International Standard on Auditing (ISA 200, Objective and General Principles Governing an Audit of Financial Statements states that the auditor should obtain sufficient appropriate audit evidence to enable him to draw reasonable conclusions therefrom on which to base his opinion on the financial information. This Auditing Technical Release (ATR is designed to assist members in complying with the ISA with respect to obtaining independent information from banks/finance companies to ascertain the existence and the amount of liabilities and the existence, amount, ownership and proper custody of assets and other information relevant to the audit of financial statements. 2. The information which auditors regularly require from banks/finance companies is substantially the same for most audits and can be obtained in a standard letter of request. The use of such a letter, which has been designed to cover all normal activities with banks/finance companies to facilitate the extraction of information from records of banks/finance companies should smooth the processing of those request. The standard letter also gives the bank/finance company a clearer understanding of auditor s requirements. 3. The standard letter of request for information from banks/finance companies for audit purpose set out in the Appendix to this ATR has been prepared following discussions with the Association of Banks in Malaysia, Association of Finance Companies of Malaysia and Association of Merchant Banks in Malaysia. Auditors are encouraged to use the standard request letter for all requests for information from banks/finance companies after May 1,

3 Authority to disclose ATR 2 4. All banks/finance companies will require the explicit authority of their customers to disclose the requested information. They will always require such authority in writing and this may be obtained either on each occasion information is requested or as an authority which continues until further notice. In either case, the customer s written authority or copy thereof is to be attached to the letter of request. In the case of a joint account, the authority should be obtained from all parties to the account. Procedures 5. Auditors should, where appropriate, adopt the following procedures in connection with requests to banks/finance companies for audit purposes: (a The standard letter set out in the Appendix to this guideline be sent in duplicate on each occasion by the auditor on his own note paper to each branch of the bank/finance company with which it is known that the client holds an account or has had dealings since the end of the previous accounting period. (b (c (d Auditors should ensure that the bank/finance company receives the client s authority to permit disclosure. This authority must be evidenced by a specific authority contained in an accompanying letter. The letter should reach the branch at least two weeks in advance of the date of the client s financial year-end. This should enable the bank/finance company to provide the information within a reasonable time after the year end. It should be borne in mind, however, that many requests arise at the same time and at a period of peak activity for the bank/finance company. Special arrangements should therefore be made with the bank/finance company in those cases where because of time constraints on the audit a reply is required within a few days of your client s yearend. The dates to be entered on the standard letter are normally the closing dates of: (i the client s accounting period for which the report is requested; and 2

4 (e (f (ii the client s previous accounting period for which a full report was compiled. If, special audited accounts are produced other than for an accounting period alternative dates should be substituted. In reviewing the bank s/finance company s reply it is important for auditors to check that the financial institution has answered all questions in full. Auditors will need to check the authenticity of any letters not received directly from the branch concerned. If an auditor receives a confirmation without having made a previous request he should check with the branch concerned that the report has been prepared in compliance with the terms of the standard letter. 6. The standard letter should be used in its complete form for all audit requests in respect of year-end financial statements and should not normally be altered or extended. In certain circumstances supplementary requests for additional information may be required for audit purposes. For administrative reasons the letter containing these supplementary requests should be submitted where possible at the same time as banks/finance companies will, as indicated above, require authority to disclose this. If the wording of the authority is not sufficiently comprehensive, additional authority may be required. For some information, such as security lodged by the third party, authority from someone other than the customer may be required. 7. The bank/finance company may choose not to reply on the copy of the standard letter itself, but instead on their own note paper. If this is the case, the auditor should check that the list of replies corresponds with the questions on the standard letter and that there have been no omissions. 3

5 APPENDIX Standard Letter of Request for Information from Banks/Finance Companies for Audit Purposes Audit & Co. Wisma Odit Kuala Lumpur The Manager.(Bank/Finance Company..(Branch Dear Sir STANDARD REQUEST FOR INFORMATION FROM BANKS/FINANCE COMPANIES FOR AUDIT PURPOSES Name of customer For the year ended In accordance with your above-named customer s instructions given on page. of this letter please send to us, as auditors of your customer for the purpose of our audit, without entering into any contractual relationship with us, the following information relating to their affairs at your branch as at the close of business on.and, in the case of item 2 during the period up to the date of your reply. We enclose an additional copy of this letter, and it would be particularly helpful if your reply could be given on the copy letter in the space provided (supported by additional schedules stamped and signed by your bank where space is insufficient. If you find it necessary to provide the information in another form, please return the copy letter with your reply. It is understood that any replies given by you will be treated by us with the strictest confidence. 4

6 Information required Account Balances (1 In respect of all accounts with your branch by the above-named customer, please give full details of the account balances thereon, including NIL balances, stating whether the balances are maintained in Ringgit or in some other currency. To facilitate your reply, we set out below details of the accounts that we understand are maintained with you by your customer. If you are aware of any other accounts maintained with you by your customer and which fall within the mandate given, please provide the same information for these accounts by listing them in the space provided. Account Name. Account Number Type of Account Note: Please indicate in the Remarks column above: (i The separate amounts accrued but not charged or credited at the above date, of: (a (b provisional charges commitment fees; and interest (including Account Balance Reply Remarks (see note 5

7 (ii (iii (iv (v The amount of interest charged or credited during the period if not specified separately in the bank statement or other documents. In the case of overdrafts and loan please note the amount of agreed facilities and repayment terms (eg. monthly/quarterly / fixed date. Where the account is subject to any restriction (eg. a garnishee order or arrestment, this information should be stated. Where the authority upon which you are providing this information does not cover any of the accounts listed above, please indicate as appropriate. (2 Please give full titles and dates of closure of all accounts closed during the period. Customer s other transactions (3 With regard to all other transactions with your customer, please give details of: (a (b total of trade bills out-standing for your customer; date, name of beneficiary and amount of any outstanding guarantees, bonds of indemnities given by you, on your customer s behalf stating whether there are recourse arrangements; (c total of bankers acceptances outstanding; 6

8 (d equivalent of total out-standing forward foreign exchange contracts in Ringgit; (e total outstanding liabilities under documentary credits, letters of credit, trust receipts, and other instruments of similar nature; (f total negotiable certificates of deposits outstanding and other instruments of similar nature; (g obligations under repurchase agreements. Assets held as security (4 Please give details (in summary form if numerous of any assets charged to the Bank/Finance Company for facilities given to your customer. Give details of the security as follows. If a security is limited in amount or to a specific borrowing, please indicate. (a (b Land title title deed number; nature of charge; Mukim/District; amount charged; registered owner. Shares name of company; share certificate number; number of shares; registered owner. (c Debenture charge number; date created, description; amount. (d Fixed deposit certificate number; amount; maturity date; name of depositor. (e Guarantee nature; amount; beneficiary; obligator; tenor. 7

9 For any other security not mentioned above, please give similar details. Customer s other assets held Under safe custody (5 Please give details (in summary form if numerous of the customer s other assets held under safe custody by your branch including safe custody by your branch including share certificates, documents of title and any other items listed in your registers maintained for the purpose of recording assets held. Yours faithfully, To the best of our knowledge and belief the information set out above is complete and must be treated as strictly private and confidential and is furnished without responsibility on the part of the Bank/Finance Company or its officers. Disclosure authorised: (Name of customer ( Official stamp of Bank/Finance Company (Authorised signatory (signed in accordance with the mandate for the conduct of the customer s Bank/Finance Company account 8

10 NOTES TO THE STANDARD LETTER (Reference are to item numbers in the standard letter (1 Account balances: The phrase all accounts includes details of all current, deposit, loan and foreign currency accounts and other advances or facilities, money held on deposit receipt. The reply should indicate whether the balance is in favour of the bank/finance company or customer. Where a number of deposits have been made or uplifted during the year, it is not necessary to give details of each separate deposit transaction as would be required in the case of the opening and closing of accounts. Accrued charges: These can be quoted only on a provisional basis; the rate for notional allowances will not be fixed until near the end of the charging period. Analysis of charges: For the purpose of profit and loss disclosure requirements it is only necessary to ask for details of interest charged. (But see note 4(b below in respect of balance sheet disclosure requirements. The details of the rate of interest applicable to any interest-bearing accounts, or the appropriate formula by which interest is calculated, should only be required exceptionally. Loan and other facilities: The following details are not normally required: (a the date term loans were granted if new or renewed during the period; (b rate of interest charged or similar form of compensation; (c the purpose of the facility. 9

11 (3 Customer s other transactions: The liabilities under indemnities given in respect of missing bills of lading do not have an expiry date. From time to time the banks/finance companies take a view on old liabilities and remove some of them from their records. Certain of these old liabilities may not therefore be shown in the figures quoted by the bank, but it cannot be guaranteed that no claim will be incurred subsequently. (4 Customer s asset held as security: (a Security includes details of charge, mortgage or other claims or security registered (eg. debenture, memorandum of deposit; assets charged and, where appropriate, cross reference to facility specifically secured. (b Assets include debentures, stock and share certificates, investments bearer or other securities; title deeds relating to freehold, leasehold or other property; bills of exchange or other negotiable instruments receivable (other than cheques; the names of persons who are able to obtain release of the assets should be ascertained from the customer and are usually covered by the bank/finance company mandate. (c Lien: Any assets held by the bank/finance company for safe custody may be subject to some form of lien, although this may only operate under particular conditions. It should be necessary to enquire only in exceptional circumstances. (d Bearer securities: detailed enquiries on bearer securities should be made of the bank/finance company only when evidence cannot be obtained from the customer or his records. 10

External Confirmations from Financial Institutions

SAAPS 6 JULY 2013 South African Auditing Practice Statement (SAAPS) 6 External Confirmations from Financial Institutions Copyright 2013 - the Independent Regulatory Board for Auditors (IRBA). All rights