Which audit procedure is most appropriate for confirming the existence of accounts?

The most appropriate audit procedure for confirming the existence of accounts is the confirmation of accounts. This procedure involves obtaining direct written verification from third parties, such as customers or banks, regarding the amounts they owe or the balances that exist. By contacting these external sources, the auditor can gain reliable evidence about the existence and accuracy of account balances reported by the client. This method is effective because it provides independent corroboration, which is crucial in establishing that the accounts actually exist as stated in the financial records.

In contrast, inspecting contracts may provide supporting evidence for certain accounts but does not directly confirm their existence. Observation of processes is more focused on assessing the procedures and controls within the organization rather than verifying account balances. Similarly, reviewing financial statements is a necessary step in the audit process, but it does not replace the need for direct confirmation from external parties to affirm the existence of specific accounts. Thus, confirmation of accounts stands out as the most reliable method for achieving this audit objective.