External confirmations
In one sentenceLetters sent to outside parties such as banks, customers and suppliers to confirm their balances with the business, with the reply going directly to the auditor.
Simply put
A confirmation is among the strongest audit evidence because it comes from an outside party, not from the business's books.
If the other party's reply differs from the books, it does not always mean an error: the difference may be a payment in transit or an invoice that has not arrived yet, so each difference is analyzed.
Worked example
A factory's books show a balance of 50,000 SAR for one of its customers. The auditor sent a confirmation, and the customer replied that the balance is 47,000 SAR.
Balance in the factory's books50,000
Balance per the customer's reply47,000
Payment the customer transferred on the last day, not yet recorded3,000
Unexplained difference after analysis0 SAR
Don't confuse it with
Bank reconciliationThe business does the reconciliation itself using the bank statement, while the auditor requests a confirmation and receives the reply directly.