12: Written Representations

Question 1

What are management representation?

Answer 1

Explanations or answers given to the assurance provider

Can be oral or written (written are more reliable, and avoid confusion)

ISA 580 requires the auditor to obtain them

Question 2

Format of written representations?

Answer 2

Auditor will:
- prepare a draft management rep letter
- ask the directors to sign it
- require its return as evidence before audit report is signed

Letter should be dated as near as possible before the date of the audit report

Question 3

What are general matters that should go in written representation?

Answer 3

• confo that management has fulfilled its responsibility for the preparation of the FSs
• confo that all relevant info has been provided to the auditor
• confo that all transactions have been recorded and reflected in the FSs

Question 4

What other matters could be in written rep?

Answer 4

Other representations necessary
- list of all uncorrected misstatements
- sum of unadjusted misstatements are immaterial to FSs as a whole

Whether accounting policies are appropriate

Whether applicable reporting framework has been compiled

Whether all deficiencies in internal controls have been communicated to auditors

Specifics determined by ISAs

Completeness of liabilities

Support for management’s judgement of intent in regards to a specific assertion

Question 5

Why would auditor have doubts over the reliability of management representations?

Answer 5

Concerns about the competence, integrity or diligence of management

Written reps are inconsistent with other audit evidence

In response:
- corroborative evidence should be sought
- inconsistencies should be investigated and should affect reliability more generally