Written Representations
Introduction
Scope of this SA
- This Standard on Auditing (SA) deals with the auditor’s responsibility to obtain written representations from management and, where appropriate, those charged with governance.
Written Representations as Audit Evidence
- Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based.1 Written representations are necessary information that the auditor requires in connection with the audit of the entity’s financial statements. Accordingly, similar to responses to inquiries, written representations are audit evidence. (Ref: Para. A1)
- Although written representations provide necessary audit evidence, they do not provide sufficient appropriate audit evidence on their own about any of the matters with which they deal. Furthermore, the fact that management has provided reliable 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.
Effective Date
- This SA is effective for audits of financial statements for periods beginning on or after 1st April, 2009.
Objectives
The objectives of the auditor are:
- To obtain written representations from management and, where appropriate, those charged with governance that they believe that they have fulfilled their responsibility for the preparation of the financial statements and for the completeness of the information provided to the auditor;
- To support other audit evidence relevant to the financial statements or specific assertions in the financial statements by means of written representations, if determined necessary by the auditor or required by other SAs; and
- To respond appropriately to written representations provided by management and, where appropriate, those charged with governance, or if
Definition
- For purposes of the SAs, the following term has the meaning attributed below:
Written representations – A written statement by management provided to the auditor to confirm certain matters or to support other audit evidence. Written representations in this context do not include financial statements, the assertions therein, or supporting books and records.
For purposes of this SA, references to “management” should be read as “management and, where appropriate, those charged with governance.” Furthermore, in the case of a fair presentation framework, management is responsible for the preparation and fair presentation of the financial statements in accordance with the applicable financial reporting framework; or the preparation of financial statements that give a true and fair view in accordance with the applicable financial reporting framework.
Requirements
Management from Whom Written Representations Requested
- The auditor shall request written representations from management with appropriate responsibilities for the financial statements and knowledge of the matters concerned. (Ref: Para. A2-A6)
Written Representations about Management’s Responsibilities
Preparation of the Financial Statements
- The auditor shall request management to provide a written representation that it has fulfilled its responsibility for the preparation of the financial statements in accordance with the applicable financial reporting framework, including where relevant their fair presentation, as set out in the terms of the audit engagement.2 (Ref: Para. A7-A9, A14, A22) Information Provided and Completeness of Transactions
- The auditor shall request management to provide a written representation that:
- It has provided the auditor with all relevant information and access as agreed in the terms of the audit engagement,3 and SA 210, “Agreeing the Terms of Audit Engagements,” paragraph 6(b)(i)
- All transactions have been recorded and are reflected in the financial statements. (Ref: Para. A7-A9, A14, A22)
Description of Management’s Responsibilities in the Written Representations
- Management’s responsibilities shall be described in the written representations required by paragraphs 9 and 10 in the manner in which these responsibilities are described in the terms of the audit engagement.
Other Written Representations
- Other SAs require the auditor to request written representations. If, in addition to such required representations, the auditor determines that it is necessary to obtain one or more written representations to support other audit evidence relevant to the financial statements or one or more specific assertions in the financial statements, the auditor shall request such other written representations. (Ref: Para. A10-A13, A14, A22)
Date of and Period(s) Covered by Written Representations
The date of the written representations shall be as near as practicable to, but not after, the date of the auditor’s report on the financial statements. The written representations shall be for all financial statements and period(s) referred to in the auditor’s report. (Ref: Para. A15-A18)
Form of Written Representations
- The written representations shall be in the form of a 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 statements provide some or all of the representations required by paragraphs 9 or 10, the relevant matters covered by such statements need not be included in the representation letter. (Ref: Para. A19-A21)
Doubt as to the Reliability of Written Representations and Requested Written Representations Not Provided
Doubt as to the Reliability of Written Representations
- If the 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 representations (oral or written) and audit evidence in general. (Ref: Para. A24-A25)
- In particular, if written representations are inconsistent with other audit evidence, the auditor shall perform audit procedures to attempt to resolve the matter. If the matter remains unresolved, the auditor shall reconsider the assessment of the competence, integrity, ethical values or diligence of management, or of its commitment to or enforcement of these, and shall determine the effect that this may have on the reliability of representations (oral or written) and audit evidence in general. (Ref: Para. A23)
If the auditor concludes that the written representations are not reliable, the auditor shall take appropriate actions, including determining the possible effect on the opinion in the auditor’s report in accordance with SA 705(Revised)4, having regard to the requirement in paragraph 19 of this SA.
Requested Written Representations Not Provided
- If management does not provide one or more of the requested written representations, the auditor shall:
- Discuss the matter with management;
- Re-evaluate the integrity of management and evaluate the effect that this may have on the reliability of representations (oral or written) and audit evidence in general; and
- Take appropriate actions, including determining the possible effect on the opinion in the auditor’s report in accordance with SA 705(Revised), having regard to the requirement in paragraph 19 of this SA.
Written Representations about Management’s Responsibilities
- The auditor shall disclaim an opinion on the financial statements in accordance with SA 705(Revised) if: (Ref: Para. A26-A27)
- The auditor concludes that there is sufficient doubt about the integrity of management such that the written representations required by paragraphs 9 and 10 are not reliable; or
- Management does not provide the written representations required by paragraphs 9 and 10.