Written representations

Question 1

Define management representations

Answer 1

Explanations or answers given to the assurance provider during the course of an engagement

Question 2

What is the format of written representations?

Answer 2

1. The auditor will prepare a draft management representation letter
2. They will ask the directors to sign it
3. They will require its return as evidence before the audit report is signed
4. The letter should be dated as near as possible before the date of the audit report

Question 3

What matters must auditors seek written representations on according to ISA 580?

Answer 3

1. Confirmation that management has fulfilled its responsibility for the preparation of the financial statements in accordance with the relevant financial reporting framework
2. Confirmation that all relevant information has been provided to the auditor
3. Confirmation that all transactions have been recorded and reflected in the financial statements

Question 4

What matters may auditors seek written representations on?

Answer 4

1. Whether accounting policies are appropriate
2. Whether the applicable reporting framework has been compiled with in respect of items such as intentions that may affect the carrying value of assets
3. Whether all deficiencies in internal control of which management is aware have been communicated to auditors
4. Specific written representations required by other ISAs
5. Support for management’s judgement of intent in relation to a specific assertion

Question 5

Why are there doubts over the reliability of management representations?

Answer 5

1. The auditor may have concerns about the competence, integrity, or diligence of management
2. Written representations might be inconsistent with other audit evidence