Written representation is used by the auditor to

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.

At AJSH, we assist our clients in dealing with internal audits, government audits, various corporate matters (Company incorporation, statutory audits, ROC Compliance, company winding-up) in India by providing them adequate support and guidance from our end. If you have any questions or wish to know more about written representation, kindly contact us.

Audit evidence is the information used by the auditor in arriving at the conclusions on which the auditor's opinion is based. Written representations contain necessary information that the auditor requires in connection with the audit of the entity's financial statements. Similar to responses to inquiries, written representations are audit evidence.

Written representations provide necessary audit evidence, complement other auditing procedures, and do not provide sufficient appropriate audit evidence on their own about any of the matters with which they deal. They do not affect the nature or extent of other audit procedures that the auditor applies to obtain audit evidence about the fulfillment of management's responsibilities or about specific assertions.

It is normally appropriate for both the CEO and the chairperson of the board of governance to sign the management representation letter.

Objectives of the Auditor
The auditor should obtain written representations from management (those charged with governance when appropriate) that they believe that they have fulfilled their responsibilities:

• For the preparation and fair presentation of the financial statements, and for the completeness of the information provided to the auditor.
• To support other audit evidence relevant to the financial statements or specific assertions in the financial statements by means of written representations, if determined necessary by the auditor or required by other AU-C sections.
• To respond appropriately to written representations provided by management.
• To respond appropriately if management does not provide the written representations requested by the auditor.

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