Page 227 - CA Inter Audit PARAM

CA Ravi Taori
To respond appropriately to written representations provided by management or if
management does not provide the written representations requested by the
auditor.
Author’s Note

• Write this extra point in case of second question
Applying the above to the given problem, the auditor would further request the management to
provide him with the Banker’s certificate in support of fixed deposits held by the company.

• Write this extra point in case of third question
Mere possession of a certificate does not absolve the auditor from his liability. He should not seek or
accept certificates when subject matter is such that it is capable of verification from internal and/or
external evidences.

In the instant case, the inventory of imported material lying with the transporter can be easily verified
with purchase order, invoice, bill of entry, custom document, payment of F.C. etc. Therefore, the
auditor in this instant case has not used available evidences. He should not have rested with the
certificate obtained from the management and could have evaluated other evidences. He may be
held liable for negligence and professional misjudgment.

QNO-- Content of WR on Management Responsibility New Course – (M24M)
580.07.50 Bhaskar CNO – SA580.040

Written representation about management’s responsibilities involves confirmation of fulfilment of
management’s responsibilities in the preparation of the financial statements providing the relevant
information and also informing about completeness of transactions. Explain.
Answer Written representation about management’s responsibilities involves confirmation of fulfilment of
management’s responsibilities in following areas: -

(I) Preparation of the financial statements
The auditor shall request management to provide a written representation that it has fulfilled its
responsibility for the preparation of the financial statements in accordance with the applicable financial
reporting framework, including, where relevant, their fair presentation, as set out in the terms of the
audit engagement.

Due to its responsibility for the preparation and presentation of the financial statements and its
responsibilities for the conduct of the entity’s business, management would be expected to have
sufficient knowledge of the process followed by the entity in preparing and presenting the financial
statements and the assertions therein on which to base the written representations.

(II) Information provided and completeness of transactions
The auditor shall request management to provide a written representation that: -
(i) It has provided the auditor with all relevant information and access as agreed in the terms of the
audit engagement and
(ii) All transactions have been recorded and are reflected in the financial statements.

QNO-- Written Representation When New Management Replaces Old New Course – (M24E/J25M)
Management
580.07.55
Bhaskar CNO – SA580.140
The management of PQ Ltd. changed during the period under audit. Mr. G an auditor, at the time of
receiving written representation on the management responsibilities from the management, was in a
dilemma related to the date of and period(s) covered by the written representation. Further, new

management was of the view that they can give written representation from the date they took over and
not for the prior period when old management were managing affairs of the company. Guide the auditor
& the management in this respect.
Answer As per SA 580, “Written Representations”, the date of the written representations shall be as near as
practicable to, but not after, the date of the auditor’s report on the financial statements. The written
representations shall be for all financial statements and period(s) referred to in the auditor’s report.

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