SA 580 WRITTEN REPRESENTATIONS

Prepared and presented by:

Dipendra Prasad Poudel

mailfordipendra@gmail.com

Scope and Effective Date of this SA

SCOPE• Deals with auditors Responsibility to obtain written

representation from management and, where appropriate, those charged with governance

EFFECTIVE DATE• Effective for audits of financial statement beginning on or

after 1st April 2009

Written Representations- A tool for Audit Evidence

• Written Representations are necessary information that the auditor requires in connection with the audit of entity’s financial statements

WRITTEN REPRESENTATION PROVIDE AUDIT EVIDIENCE, THEY DONOT PROVIDE “SUFFICIENT APPROPIATE AUDIT EVIDIENCE” (SAAE)

• If management modifies or doesn't provide the requested written representations, it may alert the auditor to the possibility that one or more significant issues may exist.

Reliability on Written Representation• The fact, management has provided reasonable written

representations • does not affect the nature or extent of;• other audit evidence that the auditor obtains; • about the fulfillment of management’s responsibilities, or about

specific assertions.

Whom shall we ask for written representations?

• Representations are requested from those responsible for the preparation and presentation of the financial statements.

• So in many cases Management is responsible however in some cases Those Charged With Governance (TCWG) are responsible party.

• In some cases management may decide to make enquiries of others who participate in preparing and presenting financial statements and assertions therein.• These includes the specialized individual like actuary, staff

engineers, Internal counsels etc

Written Representation about managements responsibilities• The auditor shall request management to provide written

representation • It has fulfilled its responsibility for the preparation of financial

statement• Financial statements are in accordance with Financial Reporting

Framework including where relevant their fair presentations.

• Written representation from management regarding information and completeness of transaction• It has provided with all the related information and access as

agreed in the terms of audit engagement, and • All transaction has been recorded and reflected in financial

statements

Date of and Period(S) covered by written representation• The date of written representation shall be as near as

practicable to, • BUT NOT AFTER, the date of auditors report on the

financial statements.• The written representation shall be for all financial statements and period(s) referred to in the auditor’s report.

Form of written representation• The written representation shall be in the form of

representation letter addressed to the auditor.

• If law or regulation requires management to make written public statements about its responsibilities, and the auditor determines that such statement provides some or all the representation required for financial statements or information regarding complete transactions, the relevant matters covered by such statements need not be included in representation letter.

Doubt as to reliability of Written Representations

• If auditor has concerns about the competence, integrity, ethical values or diligence of management, or about its commitment to or enforcement of these the auditor shall determine the effect that such concerns may have on the reliability of representation and audit evidence in general.

• If representations are inconsistent with other audit evidence, the auditor shall perform audit procedures to attempt to resolve the matter.

What if matter remains unresolved ???

• If the matter remains unresolved and the auditor considers representation are not reliable,

• the auditor shall take appropriate actions, including determining the possible effect on the opinion in the auditors report in accordance to SA 705

What if representations are not provided ?

• If the management doesn’t provide the written representation then ;

a) Discuss the matter with management

b) Re-evaluate the integrity of management and evaluate the effect that this may have on the reliability of representation and audit evidence in general;

c) Take appropriate actions, including determining the possible effect on the opinion in the auditors report in accordance with SA 705

Thank youHappy Reading

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