representations from management with appropriate responsibilities for the financial statements and knowledge of the matters concerned.
Written representations are requested from those responsible for the preparation and presentation of the financial statements. Those individuals may vary depending on the governance structure of the entity, and relevant law or regulation. However, management (rather than those charged with governance) is often the responsible party.
In some cases, however, management may decide to make inquiries of others who participate in preparing and presenting the financial statements and assertions therein, including individuals who have specialized knowledge relating to the matters about which written representations are requested. Such individuals may include:
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1 |
Actuary responsibilities |
An actuary responsible for actuarially determined accounting measurements. |
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2 |
Knowledge of environmental liability measurement |
Staff engineers who may have responsibility for and specialized knowledge about environmental liability measurements. |
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3 |
Provision for lagal claim |
Internal counsel who may provide information essential to provisions for legal claims |
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4 |
Rrepresentaon is made with appropriate authority |
In some cases, management may include in the written representations qualifying language to the effect that representations are made to the best of its knowledge and belief. It is reasonable for the auditor to accept such wording if the auditor is satisfied that the representations are being made by those with appropriate responsibilities and knowledge of the matters included in the representations. |
Written Representation About Management’s Responsibilities
The auditor shall request management to provide a written representation that it has fulfilled its responsibility for the preparation of the financial statements.
Audit evidence obtained during the audit that management has fulfilled the responsibilities is not sufficient without obtaining confirmation from management about the same. This is because the auditor is not able to judge solely on other audit evidence.
For example, the auditor could not conclude that management has provided the auditor with all relevant information agreed in the terms of the audit engagement without asking it whether, and receiving confirmation that, such information has been provided.
The written representations draw on the agreed acknowledgement and understanding of management of its responsibilities by requesting confirmation that it has fulfilled them. The auditor may also ask management to reconfirm its acknowledgement and understanding of those responsibilities in written representations. This is particularly appropriate when:
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1 |
Signing person is no longer responsible |
Those who signed the terms of the audit engagement on behalf of the entity no longer have the relevant responsibilities |
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2 |
Previous year preparation |
The terms of the audit engagement were prepared in a previous year; |
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3 |
Management misunderstanding |
There is any indication that management misunderstands those responsibilities
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4 |
Appropriate in changing situation |
Changes in circumstances make it appropriate to do so.
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Objective of audit evidence of Selected Items such as inventory ,litigation, presentaion and disclosure.
The objective of the auditor is to obtain sufficient appropriate audit evidence regarding the:
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1 |
Existence and condition of inventory |
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2 |
Completeness of litigation and claims involving the entity |
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3 |
Presentation and disclosure of segment information in accordance with the applicable financial reporting framework. |
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