Bank Confirmation Letter Purpose

Also known as a bank letter of confirmation a bank confirmation letter is a document that confirms that a loan or a line of credit has been established with a specific financial institution. The reasons why auditor request bank confirmation letters are as follows. The main purpose of the letter is usually to verify with a third party that a customer of the institution has access to the resources required to successfully execute a given business deal.

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To ensure all interest payable or receivable has been correctly accounting for in the financial statements.

Bank confirmation letter purpose. To all security that may be held be the bank is correctly disclosed in the financial statements. To ascertain the existence of any assets held by the bank on the client s behalf and whether any assets have been charged to the bank. Purposes of a bank confirmation letter.

To ensure that all bank accounts held by a company are included in the financial statements. To ascertain any interest or charges to be accrued at the year end. To obtain confirmation of all bank balances of the company at year end.

A bank confirmation letter s purpose is to assure a third party generally a seller that the borrower has access to sufficient financial resources to complete a transaction such as the purchase.