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
why are the figures presented to an auditor not sufficient for absolute reliance

Auditors Procedures - Disclosure and Presentation 1) Ascertain that what steps the client uses to identify suppliers, selling on terms that reserve title by enquiry of those c


Step 1: Determine learning objectives. Considering the importance of a course, its placement in a program of study, and its role in providing a base of knowledge to be built upon

1. Demonstrate knowledge of the current tax, auditing and accounting issues that concern governmental and not-for-profit entities 2. Explain the difference between various funds (

Will I be able to download immediately once I purchase this assignment?

Firm valuation refers to the total value of a firm in the capital market. It is the stock price of a firm times its outstanding shares. Total value of a firm is also called market

I need help with my homework for medical billing and coding can you help?

Describe How does the internal audit differ from an external audit? Ans) Internal audit nothing but the checking the product that you formed. External audit is checking you

Discontinued Operations - Audit of Accounting Estimates A discontinued operation is a component of an entity that either has been disposed of or is held for sale. So it might