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7/27/2019 Module - IsA 580
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7/27/2019 Module - IsA 580
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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
4
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
7
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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Copyright October 2010 by the International Federation of Accountants
(IFAC). All rights reserved. Permission is granted to make copies of this work
provided that such copies are for use in academic classrooms or for personal use
and are not sold or disseminated and provided that each copy bears the
following credit line: Copyright October 2010 by the International
Federation of Accountants (IFAC). All rights reserved. Used with permission of
IFAC. [email protected] for permission to reproduce, store, or
transmit this work. Otherwise, written permission from IFAC is required to
reproduce, store, or transmit, or to make other similar uses of, this work, except
as permitted by law. [email protected].
International Federationof Accountants
ISBN: 978-1-60815-073-1
www.ifac.org
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