AUTOMATION OF

AR/AP
CONFIRMATION

NEW DELHI | MUMBAI | AHMEDABAD | SYDNEY | WASHINGTON D.C.

TABLE OF CONTENTS

BACKGROUND

WHY CONFIRMATION IS NECESSARY

HOW IT WORKS

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BACKGROUND

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BACKGROUND

 Account payable and account receivable confirmation is the process to cross-check the amount and information
between the client’s records and client’s supplier’s/customer’s records. Those including the outstanding balances and
transaction.

 Accounts Payable (AP) and Accounts Receivable (AR) are categorized as current liabilities and current assets
respectively and are reported on the balance sheet. In order to close the books at period end, AP & AR should be in
reconcilement.

 To perform the reconciliation and post necessary adjustments or other corrective actions, it is required to obtain
information as per the supplier/customers records for all or select account balances as per management defined
process/guidelines.

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WHY CONFIRMATION IS
NECESSARY

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WHY CONFIRMATION IS NECESSARY
Period end account balance confirmations and reconciliation offers following benefits to the management:

 It helps to achieve error free books with accuracy and avoidance of miscalculations.

 It helps to improvise back-end work and control environment and facilitates internal auditor while auditing
accounting records.

 It reduces existence of missing transactions and bounced payments.

 It helps in avoidance of penalties, overpayments and disruption of supplies as any kind of duplicate invoice recording,
missed invoices, payment to wrong vendor, wrong allocation of payment received etc. are identified and corrected
timely.

 It helps to identify frauds and fund embezzlement.

 It allows handling disputes or creating necessary provisions in time.

 It increases credibility of relationships with vendors and customers.

 Knowledge of accurate balances allows management to readily know expected realisations/ payments in next 30 to 60
days for its working capital management and strategic planning.

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WHY CONFIRMATION IS NECESSARY
Besides this, it also facilitates the year-end audit process. Based on guidelines given in SA 505, obtaining external
confirmation is done by auditors to obtain audit evidence for verifying the existence of account balances. The auditor
typically selects customers for confirmation that have large outstanding balances, with secondary consideration given to
overdue balances, followed by a random selection having smaller receivable balances.

If the management has in place a process of obtaining confirmations, performing reconciliations and making necessary
adjustments as a period end closure process, it shall lead to following benefits in year-end audit:

 It eliminates the possibility of existence of any gaps or mismatches when the confirmations shall be obtained by the
auditors as part of audit procedures.

 There shall not be any significant or surprise audit journal entries in relation to AR/AP.

 It enhances auditor’s reliability on internal control environment of the Company.

 Auditor may choose to circulate lesser or minimum confirmations when management has provided them with
confirmations and reconciliations done internally.

 It helps in early completion of the audit process.

 Confirmations are also required for income tax assessments for allowability of expense and proof of identity.

 Confirmation will also help resolve the  litigations on account of claiming input tax credit / differences in
reconciliation of GSTR 2A under GST regulations in case balances are in agreement  with respective vendor /
customers.

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HOW IT WORKS

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HOW IT WORKS

Client AMRG & Associates AR/AP

Requestor Responder

Sends confirmation to
Initiates request 1 3 responder
through client

2 4
Receives Completes
Authorizes confirmation confirmation
request

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INITIATE CONFIRMATIONS

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CONFIRMATION MAIL TO RESPONDER

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AUTHENTICATION THROUGH OTP

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TYPES OF CONFIRMATION
Balance Confirmation

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TYPES OF CONFIRMATION
Invoice Confirmation

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SAMPLE FORMAT

Invoice Confirmation
Responder Company Responder Contact Email Address Vendor Number Invoice Number Amount Currency Phone
Sample Responder 1 Keshav keshav@email.zzz 123654789 SAMPLE1234567 999.99 INR 1111
Sample Responder 2 Sumit Kumar sumit@noplace.zzz 123654789 SAMPLE1234568 32158.25 INR 1111
Sample Responder 3 Mukesh mukesh@website.zzz 123654789 SAMPLE5678901 999.99 INR 1111
Sample Responder 4 Smita Smita@website.zzz 123654789 SAMPLE5678902 888.66 INR 1111
Sample Responder 5 Nikhil nikhil@website.zzz 123654789 SAMPLE5678903 777.33 INR 1111
Sample Responder 6 Gautam gautam.k@email.zzz 123654789 SAMPLE5678904 2536.41 INR 1111

Balance Confirmation
Responder Company Responder Contact Email Address Vendor Number Balance Currency Phone
Sample Responder 1 Sumita sumita@email.zzz 123654789 999.99 INR 12345
Sample Responder 2 Rakhi rakhi@noplace.zzz 123654789 32158.25 INR 11
Sample Responder 3 Jyoti jyoti@website.zzz 123654789 999.99 INR 111
Sample Responder 4 Jeevan jeevan@email.zzz 123654789 2536.41 INR 11

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STATUS REPORT

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MIS REPORT

Aging
Report

Respons
e Time

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 DELHI HEAD OFFICE:
18-A, Second Floor, North Avenue Road,
West Punjabi Bagh, New Delhi - 110026

MUMBAI OFFICE:
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Thane West,Mumbai - 400601

SYDNEY OFFICE:
Unit 9, 14-15 Junia Avenue, Toongabbie NSW 2146,
Sydney, Australia

AHMEDABAD DESK:
GARUD, 8th Floor, Block - 18, Udyog Bhawan,
Sector - 11, Gandhinagar, Gujarat - 382017

USA INTERNATIONAL DESK:

Wiener & Garg LLC 6000 Executive Boulevard,
Suite 520 | Rockville, MD 20852
T : 301.881.4244 • D : 240.833.400
w: www.amrg.in
t: 011-47322696/ 97
e: amrg@amrg.in