Classification of management representations, Auditing

Classification of Management Representations

The thing to note is which during the course of the audit the auditor obtains various representations from the management which can be classification into three types:

a. Not material to the financial statements.  Examples being queries on errors in book-keeping  or absent documents or

b. Capable of being corroborated through other evidence or

c. Where the knowledge of the facts is confined to the management.  As for example, the management's purpose to close down a most important branch and whether the matter is principally one of judgement and opinion for example the reliability of obsolete stock.

In (a) there is no use for the auditor to obtain separate written representations through the management (b) and.  In (c) however, the auditor should:

A. Make certain which there is no conflicting evidence

B. If he is unable to obtain corroborating evidence, rather then the auditor should get a written confirmation from the management of any representations made.

C. The auditor must decide for himself whether the total of other evidence and the management's written representation are sufficient for him to form an unqualified opinion.

The process adopted is clearly stated in ISA 580. Thus the letter should not involve routine matters but merely matters that are material to the financial statements and the auditor cannot find independent corroborating evidence.  So please notice that the letter of representation is basically one more piece of evidence and the auditor should not rely on it rashly perhaps there are times it is the merely source of evidence unlock to the auditor. Whether a representation through management is contradicted through other audit evidence, the auditor should investigate the circumstances and, where essential, reconsider the reliability of other representations made through management.

Posted Date: 1/24/2013 7:41:53 AM | Location : United States







Related Discussions:- Classification of management representations, Assignment Help, Ask Question on Classification of management representations, Get Answer, Expert's Help, Classification of management representations Discussions

Write discussion on Classification of management representations
Your posts are moderated
Related Questions
concept,need,advantage

what is the role of audit trainee in managing the discrete assignment?

Summary of IAS 2 Inventories are measured at the lower of cost and net realizable value. Entire realizable price is the calculated selling price in the regular course of busin

Co-operative Societies and Parastatals Co-operative Societies An audit in this case is carried out as a general audit except you should notice that the auditor is appoi

describe how the auditors would determine that all investments income from shares had been properly recorded in the accounting records

Co-operative Societies An audit in this case is carried out as a normal audit except you should note that the auditor is appointed by the Commissioner of Co-operatives and alth

How would you value the Goodwill

Permanent Audit File The permanent audit file might include, inter alia: a) A copy of the enterprise's statutes and other legal or statutory documents governing the enterpri

Benefits of Internal Audit are following: It is in-expensive. No charted accounted is needed to audit internally. Faults will be removed before preparing financial stateme

postage stamps 220 currency and coins 1156.60 how much petty cash fund shall be shown as part of cash balance