Master ACCA F8 Audit & Assurance 2025 – Ace It with Confidence and Style!

In the context of auditing, circularisation refers specifically to the process of confirming balances with customers. This is a critical step in the audit process as it helps verify the accuracy and existence of the amounts recorded in the financial statements. By sending confirmation requests to customers, auditors can directly obtain third-party verification of accounts receivable balances. This procedure helps to ensure that the financial records are reliable and provides evidence to support the completeness and accuracy of this area of the accounts.

The significance of this practice lies in its ability to address potential misstatements in the financial statements. By securing independent confirmation of outstanding balances, auditors can enhance the credibility of the numbers reflected in the financial records. It also aids in identifying any discrepancies that may raise concerns about the recording of transactions or the overall financial position of the entity being audited.