ISA 580 - Written Representation Flashcards
ISA 580: Written Representation (WR)
WR is one of the Audit evidences which the Auditor will obtain during the course of the Audit.
WR - What is it?
> Is a Written Statement.
> Obtained by the Auditor.
> From the appropriate level of management.
* To confirm particular matter.
* To support/ corroborate other Audit Evidences.
Corroborate meaning:
> To confirm or give support to, or endorse.
*WR is not 100% reliable.
*WR is not SAAE.
> WR is addressed to the Auditor.
On the Letter head of the client.
The Standard clarifies that, though the following are prepared by Management, they don’t amount to Written Representation:
> Financial Statements.
> Books of Accounts
> Records
> Vouchers
> Public Documents like Prospectus.
We need Written Representation for two reasons:
1. To confirm certain matters.
2. To support the other Audit Evidences.
- To confirm certain matters:
> Management fulfilled their responsibilities for preparation and presentation of financial statements as per applicable FRF.
> Management provides the Auditor with all the required information in which all the transactions are recorded and all the disclosures are adequately given.
> Proper description about the Management’s acknowledgement of their responsibilities.
If the Auditor believes there is any requirement of more than one WR, then he can obtain.
If there is clear public disclosure of the management or if there is any public statement about their responsibility, then separate WR is not required.
> Check the Integrity, competences, ability, diligence of the management.
> If WR is contradicting, Resolve the matter by performing additional Audit Procedures.
> Even then if there is sufficient doubt, either withdraw or give DISCLAIMER OF OPINION.
What to do if management denied giving WR even after the several requests by Auditor?
* Then the Auditor needs to do the following:
> Discuss with Management.
> Reevaluate the reliability and integrity of the management.
> If there is sufficient doubt regarding reliability, integrity or competence of the management, then the Auditor needs to check the impact on the Financial Statements and express DISCLAIMER OF OPINION or withdraw.
> Before giving Disclaimer of opinion or withdraw, Auditor needs to communicate with the management and understand the reasons and try to communicate with TCWG.
When do we obtain WR?
Either on:
> The date of Audit Report, or
> Just before the date of Audit Report.
WR are reconfirmations from management.
Period covered is the period covered by Financial Statements.
WR should not be Obtained after the date of the Audit Report.
