Written Representations

ISA Implementation Support Module

Prepared by IAASB Staff
October 2010
Overview
• Introduction
• Significant Features of New Standard
– Basis for Requiring Written Representations
– Written Representations as Audit Evidence
– Source of Written Representations
– Management’s Responsibilities
– Specific Written Representations
– Dating of Written Representations

2
Introduction
• The context for revising ISA 580
– Firms’ practices around the world regarding written
representations had become inconsistent
– Evidence of excessive or undue reliance on written
representations from quality control inspections
– Question of where primary responsibility for the
financial statements lies as a result of a spate of
major corporate scandals

3
Basis for Requiring Written Representations

Old ISA 580 New ISA 580

When other audit evidence

To support other audit
cannot reasonably be
evidence
expected to exist

4
Written Representations as Audit Evidence
• Written representations are audit evidence
– They are necessary information used to arrive at audit
conclusions
• However, on their own they cannot be relied upon
for audit evidence to support audit conclusions
• A written representation defined as a written
statement that management provides to the auditor
to confirm certain matters or to support other audit
evidence
– Not to be confused with an external confirmation
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Source of Written Representations

Old ISA 580 New ISA 580

Only from management who

has responsibility for:
Ordinarily management with
(1) Preparing and presenting
primary responsibility for the
financial statements; and
entity and its financial aspects
(2) Is knowledgeable about the
relevant matters

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Management’s Responsibilities

Old ISA 580

Audit evidence that management acknowledges

ISA 210
its responsibility for fair presentation of f/s

Written representations that management has:

(1) Fulfilled its responsibility for preparation and,
New ISA 580 where relevant, fair presentation of f/s; and
(2) Provided auditor with all relevant information
and access

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Management’s Responsibilities
• Two further requirements
– Written representations that all transactions have been
recorded and are reflected in the financial statements − to
support audit evidence regarding completeness
– Description of management’s responsibilities in written
representations to be consistent with description of those
responsibilities in agreed terms of engagement
• No requirement for written representation regarding
fulfillment of management’s responsibility
regarding internal control
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Management’s Responsibilities
• Audit evidence about completeness cannot be
obtained when:
– Management fails or refuses to provide the written
representations regarding fulfillment of its responsibilities
– There is sufficient doubt about management’s integrity
such that the written representations are not reliable
• Judgment about whether management has fulfilled
its responsibilities cannot be formed on basis of
other audit evidence in these circumstances
• Disclaimer of opinion required in such a case
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Specific Written Representations

ISA 580: Overarching basic principles on written representations

Specific written Specific written

representations required representations auditor
by other ISAs believes are necessary

To support other To support other

audit evidence audit evidence
regarding specific regarding specific
aspects of f/s assertions

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Dating of Written Representations
• Date written representations as near as practicable
to, but not after, date of audit report
– Written representations are necessary audit evidence
without which audit opinion cannot be expressed
• Written representations should cover all financial
statements and period(s) referred to in audit report
– Important for management to reaffirm that written
representations for prior periods are still appropriate
– Requirement applies even if current management were
not present during all periods referred in audit report
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Note

This set of support slides does not amend or override

the ISAs, the texts of which alone are authoritative.
Reading the slides is not a substitute for reading the
ISAs. The slides are not meant to be exhaustive and
reference to the ISAs themselves should always be
made. In conducting an audit in accordance with
ISAs, the auditor is required to comply with all the
ISAs that are relevant to the engagement.

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 International Federation
of Accountants

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