Written Representations

• Auditing and Assurance
• ||
• February 3, 2022

Written representations refer to a written statement provided by management to the auditor to confirm certain matters or support other audit evidence. Written representations shall not include financial statements and supporting books and records in this context. The auditor’s responsibility to obtain written representations from management or those charged with governance (where appropriate) is dealt with in SA 580.

Written representations as a tool of audit evidence
Audit evidence refers to information used by the auditor in arriving at the conclusions forming the basis of audit opinions. However, written representations alone cannot constitute “Sufficient and Appropriate Audit Evidence”.

Thus, written representations do not affect the nature and extent of other audit evidence required by the auditor. (Sufficiency is a measure of the quantity of audit evidence; Appropriateness is relevance and reliability of Audit Evidence in supporting auditor’s opinion)

Objective
As regards SA 580, the objective of the auditor is to obtain written representations of management that the management has fulfilled its responsibility towards preparation and presentation of financial statements and has provided the auditor all the information and burst to all the records of the entity and to obtain such other representations as an auditor may require in the course of the audit.

Date of written representations and period covered therein
The date of written representations shall be near the auditor’s report’s date but not after that date. It shall cover the period specified in the auditor’s report.

What if management refuses to provide written representations?
As per SA 580, in case of management is not willing to provide written representations:

• Initially, an auditor is required to discuss the matter with management
• If management does not provide a satisfactory explanation auditor shall evaluate what effect such representation is going to have on the reliability of audit evidence
• Re-evaluate the Integrity of management
• Take appropriate actions and assess the effect on audit opinion under SA 705

Doubt as to the dependable of written representations
If the information provided in written representations appears to be inconsistent with that in other audit evidence:

• The auditor shall attempt to resolve the matter by performing various audit procedures
• The auditor shall reevaluate the assessment of the Integrity of the management in case the issue is not resolved.
• The auditor shall regulate the effect on the reliability of representations (oral or written) and audit evidence in general.
• Suppose the auditor concludes that the written representations are unreliable. In that case, the auditor shall take appropriate actions, including determining the possible effect on the opinion in the auditor’s report under SA 705.

The auditor is examined with events arising up to the date of the auditor’s report that may need adjustment to or disclosure in the financial statements; the written representations should be dated as near as attainable to, but not after, the date of the auditor’s report on the financial statements.

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