Glossary
Audit & Controls

Bank Confirmation

By: Alec Hollingsworth
Updated:  
June 16, 2025

DEFINITION:

A bank confirmation is a direct verification from a bank about an organization’s account balances and transactions, often used during audits.
A bank confirmation is a formal request sent by an auditor or organization to a financial institution to verify the accuracy of account balances, loan amounts, and other details reported by the organization. This process is a key part of an audit, as it provides independent evidence directly from the bank regarding the existence and condition of a nonprofit’s cash or loan accounts. Bank confirmations help ensure that the organization’s financial statements are free from material misstatement and that all bank-related transactions have been accurately recorded. Typically, the bank responds directly to the auditor, confirming or clarifying the information provided.

Key Takeaways

  • Bank confirmations provide independent verification of account balances.
  • They are essential for audit accuracy and detecting discrepancies.
  • Responses come directly from the bank to ensure impartiality.
  • They support compliance with accounting standards.

Why It Matters

Bank confirmations help verify cash balances and detect fraud or errors.

Real World Example

A nonprofit organization is undergoing its annual financial audit. The auditor requests a bank confirmation from the nonprofit’s primary bank to verify the reported cash balance as of year-end. The bank receives the request and confirms the account’s balance, any outstanding loans, and any collateral agreements. The auditor compares this information with the nonprofit’s records in Aplos and finds everything matches. This independent confirmation provides assurance that the reported cash balances are accurate, supporting the integrity of the nonprofit’s financial statements and helping the organization demonstrate transparency to donors and regulators.

How Aplos Helps

In Aplos, reconciling your bank accounts is essential for accurate reporting. During audits, you may need to provide bank confirmations to validate your account balances entered in Aplos. The platform’s reporting features make it easier to match transaction records to confirmed figures from your bank, ensuring your records are audit-ready.
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Frequently Asked Questions

What is a bank confirmation?

A bank confirmation is a direct verification from a bank regarding an organization’s account balances and transactions, typically requested during an audit.

Why do auditors request bank confirmations?

Auditors request bank confirmations to obtain independent evidence confirming the accuracy of reported account balances and detect any discrepancies.

How does a bank confirmation support nonprofit transparency?

By providing third-party verification of financial data, bank confirmations help nonprofits demonstrate accuracy and transparency to donors and regulators.

Related Terms

Reclassification Entry
Mileage Log
Release from Restriction
Contra Account
Supplemental Schedule
Petty Cash

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