The letter that is sent by the bank or any other financial firm to their clients as a part of inspection and check and balance process of their corporation is known as the balance confirmation letter. Banks use this letter to verify if their statements match with the books that customers or account holders keep along with the confirmation before crediting or debiting a big amount in or out of their accounts. When there is an official audit in the bank, the auditors might ask the bank administration to send balance confirmation letters to all of their account holders in order to make sure there is no error or mistake in the financial statements prepared by the bank officials.
Brief Description of Balance Confirmation Letter:
It is very obvious to understand that the key purpose of a balance confirmation letter is to ask the customer to confirm if the balance in their personal books matches with the financial statements that the bank prepares on periodic basis i.e. every month or three times a year. There are different types of balance confirmation letters. For example, when there is a big check comes in bank for withdrawal, before deducting anything from the account, bank confirms with the client if he did issue the check and if he verifies the amount on the check. Another type of confirmation letter is when the bank is asked to transfer a big amount into another account and before doing so; the bank manager writes this formal letter to the account holder and asks him to confirm the amount and account number.
On the other hand, when there is an audit going on in the bank, the auditors might require seeing if the ledgers match with the account holders’ books. With the confirmations and replies sent by the accounts holders, it is very easy to locate any mistake or error. Banks also send random balance confirmation letters to their account holders in order to make sure that the bank ledgers are showing the same amount as the customers’ books.
Sample Balance Confirmation Letter
Western International bank
Mr. Jeremy Donald
Account number: 548-592-14889-19483-001
Date: 24 August, 2015
Subject: balance confirmation letter for annual audit
Dear Mr. Donald,
I hope you are fine and doing well. I am writing this letter in order to inform you that we are conducting annual audit at our bank and it’s the time of the year when we ask our account holders to take a couple of minutes out of their busy schedules and confirm the balance in their accounts so that we can match it with our ledgers and make sure there is no error.
You are the account holder in our bank with the account number 548-592-14889-19483-001 and you opened this account on 31 March, 2008. As of today, our ledgers and audit reports are showing a balance of $594,900 in your account and we would like you to check your personal books and confirm this figure at your earliest convenience.
Western International Bank