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 Rep...
Introduction• The context for revising ISA 580  – Firms’ practices around the world regarding written    representations h...
Basis for Requiring Written Representations        Old ISA 580               New ISA 580  When other audit evidence       ...
Written Representations as Audit Evidence• Written representations are audit evidence   – They are necessary information u...
Source of Written Representations          Old ISA 580                       New ISA 580                                  ...
Management’s Responsibilities  Old ISA 580   Audit evidence that management acknowledges                                  ...
Management’s Responsibilities• Two further requirements   – Written representations that all transactions have been     re...
Management’s Responsibilities• Audit evidence about completeness cannot be  obtained when:   – Management fails or refuses...
Specific Written Representations    ISA 580: Overarching basic principles on written representations      Specific written...
Dating of Written Representations• Date written representations as near as practicable  to, but not after, date of audit r...
NoteThis set of support slides does not amend or overridethe ISAs, the texts of which alone are authoritative.Reading the ...
International Federation                            of AccountantsCopyright © October 2010 by the International Federation...
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Module -isa_580

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Module -isa_580

  1. 1. Written Representations ISA Implementation Support Module Prepared by IAASB Staff October 2010
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. 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 5
  6. 6. 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 6
  7. 7. 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 7
  8. 8. 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 8
  9. 9. 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 9
  10. 10. 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 10
  11. 11. 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 11
  12. 12. NoteThis set of support slides does not amend or overridethe ISAs, the texts of which alone are authoritative.Reading the slides is not a substitute for reading theISAs. The slides are not meant to be exhaustive andreference to the ISAs themselves should always bemade. In conducting an audit in accordance withISAs, the auditor is required to comply with all theISAs that are relevant to the engagement. 12
  13. 13. International Federation of AccountantsCopyright © October 2010 by the International Federation of Accountants(IFAC). All rights reserved. Permission is granted to make copies of this workprovided that such copies are for use in academic classrooms or for personal useand are not sold or disseminated and provided that each copy bears the followingcredit line: “Copyright © October 2010 by the International Federation ofAccountants (IFAC). All rights reserved. Used with permission of IFAC. Contactpermissions@ifac.org for permission to reproduce, store, or transmit thiswork.” Otherwise, written permission from IFAC is required to reproduce, store,or transmit, or to make other similar uses of, this work, except as permitted bylaw. Contact permissions@ifac.org.ISBN: 978-1-60815-073-1 www.ifac.org

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