Complete Confirmation Memo template
Complete Confirmation Memo (template attached)
Please follow the steps below before starting working on the bullet points.
1."An Introduction" bullet point. explaining the procedures/steps being performed and why
2. "One paragraph per confirmation response summarizing your findings." You will need to look at cash balance in the exhibits (attached) and the cash from the bank confirmations to make sure the cash is accurate and explain what additional steps you think should be taken to feel satisfied that the cash balance appropriately stated.
3. "One paragraph discussion the SOC3 report available" you might want to give an explanation of why you believe that SOC report is or is not the best one for our purpose.
4. Last bullet point "Conclusion" you will need you will need to explain on whether you believe that cash is or is not materially correct.
18
To: [Instructor’s Name] – Audit Manager
From: [Student Name(s)] – Audit Staff
Date:
Re: Simply Soups Inc. Cash Confirmations
Background – Positive Confirmations:
Use of Third-Party Intermediary:
Conclusion:
,
Simply Soups Inc. has hired us at Putnam and Jacobs LLP, to perform a financial statement audit for the year ended December 31, 20CY. Using the proper proposed standards set forth by the PCAOB, we as the auditors were tasked with testing the cash balances reported by Simply Soups Inc. at year-end. With the addition of a proper trial balance, cash lead sheet, bank reconciliation testing summary, and key information related to the 6 banks, we need to ensure that the numbers being reported in the confirmations are materially correct. According to (PCAOB 2010b), confirming the Company’s cash balance with each bank generally provides reliable evidence, however, the confirmation process is subject to the risk of interception and alteration of confirmation responses. Therefore, the necessary steps are being taken when it comes to the receival of the bank balances. Through the learn.confirmation.com intermediary, we were able to establish our audit group, authorized signers, the 4 banks, and the 2 additional advanced banks with the necessary account information. Once we established each bank with the correct account ID, we needed direct special authorization from either authorized signers Lou Jennings or Chuck Rogers, or even both, prior to even starting the initial confirmations. Once we received the necessary authorization, we started the initial confirmations as of 12/31/20CY (2021). These steps are set in place as a deterrent and safeguard against interception of documents and fraud. Furthermore, they establish accuracy in information that needs to be provided such as bank information, emails, addresses, and much more, all of it being case sensitive. It’s critical as auditors to maintain control over the entire confirmation process.
Memo
Bank of citizens: 304,312.43
American Northwest Bank: 121,987.17
BNY Federal: 493,154.12
Fifth Federal: 508,219.33
Sparkasse-Frankfurt: 315,711.76
Tenth national (this was the out of network bank): 312,580.29
All 6 banks: initial confirmation denials based on “incorrect information entered.” Were corrected and processed for new confirmations.
Confirmations received and completed 5 banks gave us the exact amount and 1 bank required a reconfirmation and it gave us the correct amount
The exhibits 1-4 are given in the email case study towards the bottom. It will help us write out the memo and understand the results.
SOC3 report Only briefly mentioned on page 29, it also talks about it on step 4: obtaining an understanding of intermediary controls. It tells us how to access the report. I followed the instructions and went to the home page security tab section, but there is nothing there about SOC3 or downloading it.
Confirmation logs
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19
EXHIBIT 1
Trial Balance
Work Paper Reference: 100-4
Prepared By W. Downey (Intern)
1/7/20CY+1
6:40 PM Simply Soups Inc. PBC
1/7/20CY+1 177 Washington Lane, Cherry Hill, NJ 08034
609-555-5555
Trial Balance
As of December 31, 20CY
Debit Credit
Cash – Acct. 10000
Fifth Federal 478,921.54 A
Sparkasse-Frankfurt 235,087.29
American NorthWest Bank 144,019.83
BNY Federal 477,832.15
Tenth National Bank 301,015.18
Bank of Citizens 348,701.60
1,985,577.59
Accounts Receivable – Acct. 11000
Tick Legend
A
The sum of this balance was agreed into the Balance
Sheet without exception, W. Downey (Intern)
PBC Prepared by client
20
EXHIBIT 2
Cash Lead Sheet
Work Paper Reference: 100-1
Prepared By W. Downey (Intern)
1/8/20CY+1 Cash Lead Sheet
Simply Soups Inc.
As of December 31, 20CY
Account
Balance
12/31/CY
($)
TB
Balance
9/30/CY
($)
PQ
Change from
9/30/CY to
12/31/CY ($)
Change from
9/30/CY to
12/31/CY (%)
Balance
12/31/PY
($)
PY
Change from
12/31/PY to
12/31/CY ($)
Change from
12/31/PY to
12/31/CY (%)
Fifth Federal 478,921.54
492,531.16
(13,609.62) -2.76% 489,119.72
(10,198.18) -2.09%
Sparkasse-
Frankfurt 235,087.29
229,791.07
5,296.22 2.30% 231,686.49
3,400.80 1.47%
American
NorthWest Bank 144,019.83
151,674.92
(7,655.09) -5.05% 149,277.31
(5,257.48) -3.52%
BNY Federal 477,832.15 462,403.33 15,428.82 3.34% 469,512.91 8,319.24 1.77%
Tenth National
Bank 301,015.18
311,653.46
(10,638.28) -3.41% 316,987.22
(15,972.04) -5.04%
Bank of Citizens 348,701.60 309,243.12 39,458.48 12.76% 311,784.63 36,916.97 11.84%
Tick Legend TB Agreed to 12/31/CY Trial Balance without exception PQ Agreed to 09/30/CY Trial Balance without exception PY Agreed to 12/31/PY Trial Balance without exception
21
EXHIBIT 3
Bank Reconciliation Testing Summary
Work Paper Reference: 100-2
Prepared By: DRH (Audit Associate)
1/10/20CY+1
Bank Rec Testing Summary
Simply Soups Inc.
As of December 31, 20CY
Account
Bank Balance
12/31/CY
A
Reconciling
Items
B
Book Balance
12/31/CY
TB
Notes
Fifth Federal 508,219.33
29,297.79
478,921.54
Sparkasse-Frankfurt 315,711.76 80,624.47 235,087.29
American NorthWest Bank 121,987.17 (22,032.66) 144,019.83
BNY Federal 493,154.12 15,321.97 477,832.15
Tenth National Bank 312,580.29 11,565.11 301,015.18
Bank of Citizens 304,312.43 (44,389.17) 348,701.60
Tick Legend
A Agreed to 12/31/20CY Bank Statements without exception
B Reconciling items were tested without exception, see Bank Test Documentation (Audit Step 100-3)
TB Agreed to 12/31/20CY Trial Balance without exception
22
EXHIBIT 4
Key Information for the audit step “Confirm Cash Balances”
Audit Firm: Putnam and Jacobs LLP
Year End Date: December 31, 20CY
Client Address: 177 Washington Lane Cherry Hill, NJ 08034
Client Phone Number: 609-555-5555
Client Contacts: Lou Jennings [email protected]
Chuck Rogers [email protected]
Bank Accounts – 20CY PBC
Bank Name Bank Address Bank Manager
Account
Name
Account
Number(s)
Authorized
Signer
Fifth Federal
73 Union Street New York
NY 10001 George Williams Checking 675-42223 Lou Jennings
Sparkasse-Frankfurt
Landstrasse 89-21 Frankfurt
60326 DE Helga Jones Checking 44-322711 Lou Jennings
American
NorthWest Bank
234 Market Street
Milwaukee WI 53202 Richard Johnson Checking 05-198305 Lou Jennings
BNY Federal
3621 Ave De Lafayette
Boston MA 02111 Betty Smith Savings 061-22031 Lou Jennings
Tenth National Bank
313 S. Chadwick Street
Philadelphia PA 19103 Greg Fordham Savings 26-798422 Lou Jennings
Bank of Citizens
3621 Union Ave Denver CO
80220 Denise Bentley Checking 89-123661 Lou Jennings
Tick Legend
PBC Prepared by Client
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