Completion T7

Question 1

Why we do written representations

Answer 1

Often representations are made by management throughout the course of an Audit.

These are often made orally (word of mouth) and therefore are not reliable.
In order to improve reliability, the auditor will request that certain representations are documented in a written representation letter.

Question 2

General matters- What do general representations confirm management have done

Answer 2

Fulfilled their responsibility for the preparation of financial statements in accordance with an applicable accounting framework.

Provide the auditor with all relevant information and access to all books and records.

Recorded and reflected transactions in the financial statements.

Question 3

When are written representations dated/ produced

Answer 3

As near as possible to the audit report, however it can’t be afyer

Question 4

What other written representations besides general, may the auditor request for as they deem it necessary for other evidence.

Answer 4

Whether the selection of accounting policies are appropriate

Where actual and contingent liabilities exist (potential liability such as provisions that are estimated.)

Plans that may affect the classification and carrying amount of an asset.

Whether all internal control deficiencies have been communicated to management.

Any matters where the facts are confined to management- so the outcome of an event depends on managements behaviour

Question 5

What should we do with written representation letters

Answer 5

Seek supporting/ corroborative evidence

Evaluate reasonableness and consistency of evidence

Assess individuals making the representations

DON’T USE IT AS A SUBSTITUTE TO OTHER AUDIT EVIDENCE.

Question 6

What to do if representations are inconsistent with other audit evidence

Answer 6

Perform audit procedures to try and resolve the matter

Reconsider its assessment of management if matter is not resolved

Determine the effect on the reliability of representations in general

Question 7

What to do if management refuse to sign the representations

Answer 7

Refer to a senior colleague to deal with

The colleague can discuss with them the importance and why they are needed.