12: Written representations

Question 1

What is the form of a written representation letter

Answer 1

It is written by an auditor, signed by the company’s directors on entity letter headed paper, prior to the completion of audit work and before the audit report is signed.

Question 2

What are general matters related to written representations

Answer 2

Those charged with governance have:
- Fufilled their responsibility for the preparation of the financial statements in accordance with the applicable financial reporting framework.
- Provided the auditor with all relevant info and to all accounting records
- Recorded and reflected all transactions in the financial statements
- Management acknowledge that the aggregated uncorrected misstatements are immaterial to the f/s

First three same as engagement letter

Question 3

Why might other representations be required

Answer 3

If knowledge of facts is confined to management or the matter is one of judgement or opinion

Question 4

Why might representations be unreliable

Answer 4

If auditor has concerns over managements integrity, due to competence, integrity, ethical values etc, they may have concerns over the reliability of representations.

Question 5

What if representations are inconsistent

Answer 5

If representations are inconsistent with other audit evidence, Auditor should perform audit procedures in an attempt to resolve the matter.