Do you need a letter of credit for the bank social security account?

Generally speaking, confirmation is required, but the social security special account is often not important to the financial statements, and the risk of major misstatement related to it is very low, so the confirmation procedure can be omitted.

1. command

Information about enterprises, banks and other financial institutions must be authenticated. Except for special accounts, all accounts must be certified by letter, that is, bank deposit certification cannot adopt the way of "audit sampling"

In practice, the special tax account and social security account of the audited entity are often not important to the financial statements, and the risk of major misstatement related to them is very low, so it is impossible to implement the confirmation procedure.

2. Letter amount

The amount of the bank deposit letter, fill in the balance on the bank statement, not the amount recorded by the audited entity. This needs to be treated differently from the amount of accounts receivable and accounts payable.

3. Alternative audit procedures

There is no good alternative audit procedure for bank deposit confirmation, that is, confirmation is usually needed.

4. Response rate

The recovery rate of bank deposits is high, because there is a certain fee for bank recovery. If the response rate of the audited entity is low, the possibility of fraud should be considered.

2. Letter amount

The amount of the bank deposit letter, fill in the balance on the bank statement, not the amount recorded by the audited entity. This needs to be treated differently from the amount of accounts receivable and accounts payable.

3. Alternative audit procedures

There is no good alternative audit procedure for bank deposit confirmation, that is, confirmation is usually needed.

4. Response rate

The recovery rate of bank deposits is high, because there is a certain fee for bank recovery. If the response rate of the audited entity is low, the possibility of fraud should be considered.

Generally speaking, there are several kinds of balances related to bank deposits: bank statement balance, enterprise book balance and bank reconciliation balance table. Due to the existence of unsettled items, the balance of bank statement and enterprise book bank deposit may be different. In the audit work, the bank confirmation letter should be filled out according to the deposit balance on the audit base date of the audited unit's bank statement.