This document provides an overview of the significant changes made in the new ISA 580 regarding written representations from management. Key changes include: 1. Requiring written representations to support other audit evidence obtained, rather than as a substitute when evidence cannot reasonably be expected to exist. 2. Clarifying that written representations are audit evidence but cannot solely support audit conclusions. 3. Specifying that representations should only be obtained from management responsible for the financial statements and knowledgeable about relevant matters. 4. Expanding the responsibilities that management must acknowledge via representation, including preparation and fair presentation of financial statements.

1. Written Representations
ISA Implementation Support Module
Prepared by IAASB Staff
October 2010

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
12

13. International Federation
of Accountants
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ISBN: 978-1-60815-073-1
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