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Introduction

Significant Features of New Standard

Basis for Requiring Written Representations

Written Representations as Audit Evidence

Source of Written Representations

Managements Responsibilities

Specific Written Representations

Dating of Written Representations

Overview

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The context for revising ISA 580

Firms practices around the world regarding written

representations had become inconsistent

Evidence of excessive or undue reliance on writtenrepresentations from quality control inspections

Question of where primary responsibility for the

financial statements lies as a result of a spate of

major corporate scandals

Introduction

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Basis for Requiring Written Representations

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When other audit evidence

cannot reasonably beexpected to exist

Old ISA 580 New ISA 580

To support other auditevidence

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Written representations are audit evidence

They are necessary information used to arrive at audit

conclusions

However, on their own they cannot be relied uponfor 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

Written Representations as Audit Evidence

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Source of Written Representations

6

Ordinarily management with

primary responsibility for theentity and its financial aspects

Old ISA 580 New ISA 580

Only from management who

has responsibility for:

(1) Preparing and presenting

financial statements; and

(2) Is knowledgeable about the

relevant matters

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Managements Responsibilities

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Audit evidence that management acknowledgesits responsibility for fair presentation of f/s

Old ISA 580

New ISA 580

Written representations that management has:

(1) Fulfilled its responsibility for preparation and,where relevant, fair presentation of f/s; and

(2) Provided auditor with all relevant information

and access

ISA 210

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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 managements responsibilities in written

representations to be consistent with description of those

responsibilities in agreed terms of engagement

No requirement for written representation regardingfulfillment of managements responsibility

regarding internal control

Managements Responsibilities

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Audit evidence about completeness cannot beobtained when:

Management fails or refuses to provide the written

representations regarding fulfillment of its responsibilities

There is sufficient doubt about managements integrity

such that the written representations are not reliable

Judgment about whether management has fulfilled

its responsibilities cannot be formed on basis ofother audit evidence in these circumstances

Disclaimer of opinion required in such a case

Managements Responsibilities

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Specific Written Representations

10

ISA 580: Overarching basic principles on written representations

Specific writtenrepresentations required

by other ISAs

Specific writtenrepresentations auditor

believes are necessary

To support other

audit evidence

regarding specific

aspects of f/s

To support other

audit evidence

regarding specific

assertions

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Date written representations as near as practicableto, 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

Dating of Written Representations

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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 theISAs that are relevant to the engagement.

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