Checklist for Auditors when Obtaining Written Management Representations (SA 580)

SA 580, Written Representations, deals with the auditor’s responsibility to obtain written representations from management and, where appropriate, those charged with governance. Written representations are necessary information that the auditor requires in connection with the audit of the entity’s financial statements. Accordingly, similar to responses to inquiries, written representations are audit evidence.

Although written representations provide necessary audit evidence, they do not provide sufficient appropriate audit evidence on their own about any of the matters with which they deal. Furthermore, the fact that management has provided reliable written representations does not affect the nature or extent of other audit evidence that the auditor obtains about the fulfilment of management’s responsibilities, or about specific assertions. This story discusses the checklist for the auditor to be considered while obtaining the MRL.

1. Whether the auditor has obtained from the management and, where appropriate, those charged with governance written representations (WRs) that all known instances of non-compliance or suspected non-compliance with laws and regulations whose effects should be considered when preparing financial statements have been disclosed to the auditor

2. Whether the auditor has obtained written representations (WRs) from management and, where appropriate, those charged with governance whether they believe significant assumptions used in making accounting estimates are reasonable

3. Whether the auditor has obtained a written representation (WR) from management and, where appropriate, those charged with governance that they believe the effects of uncorrected misstatements are immaterial, individually and in the aggregate, to the financial statements as a whole. A summary of such items shall be included in or attached to the written representation

4. Whether the auditor has obtained written representations (WRs) from the management regarding the classification and valuation of investments for Balance Sheet purposes

5. Whether the auditor has obtained written representations (WRs) from the management regarding the recoverability of debtors and loans and advances and their classification for balance sheet purposes

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