ISSAI 1580The International Standards of Supreme Audit Institutions, ISSAI, are issued by the potx

Written Representations This Financial Audit Guideline draws on the exposure draft of proposed International Standard on Auditing ISA 580 Revised and Redrafted, “Written Representations

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ISSAI 1580 The International Standards of Supreme Audit Institutions, ISSAI, are issued by the International

Organization of Supreme Audit Institutions, INTOSAI For more information visit www.issai.org

Written Representations

This Financial Audit Guideline draws on the exposure draft of proposed International Standard on Auditing (ISA) 580 (Revised and Redrafted), “Written Representations” developed by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC) The proposed ISA is included in this Guideline with the permission

of IFAC

Exposure Draft of INTOSAI Practice Note, pages 3-6

(ISA 580 enclosed for reference)

For Comments

30 October 2008 – 30 January 2009

This is trial version www.adultpdf.com

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T able of Contents

A PPLICABILITY OF THE ISA IN P UBLIC S ECTOR A UDITING 3

A DDITIONAL G UIDANCE ON P UBLIC S ECTOR I SSUES 4

P REMISE , RELATING TO M ANAGEMENT ’ S R ESPONSIBILITIES , ON WHICH

M ANAGEMENT FROM WHOM W RITTEN R EPRESENTATIONS R EQUESTED 4

O THER W RITTEN R EPRESENTATIONSF EL ! B OKMÄRKET ÄR INTE DEFINIERAT

D OUBT AS TO THE R ELIABILITY OF W RITTEN R EPRESENTATIONS AND

R EQUESTED W RITTEN R EPRESENTATIONS N OT P ROVIDED 5

A PPENDIX 1: A DDITIONAL E XAMPLES FOR A PPENDIX 2 OF ISA 580

(R EVISED AND R EDRAFTED ) “I LLUSTRATIVE R EPRESENTATION

This is trial version

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ISSAI 1580

Practice Note1 to (Revised and Redrafted)

International Standard on Auditing 580 –

Written Representations

Background

This Practice Note provides supplementary guidance on (Revised and Redrafted)

ISA 580 – Written Representations It is read together with the ISA The Practice

Note is effective the same date as the ISA

Scope of the ISA

This International Standard on Auditing (ISA) deals with the auditor’s responsibility

to obtain written representations from management and, where appropriate, those

charged with governance

Appendix 1 lists other ISAs containing subject-matter specific requirements for

written representations The specific requirements for written representations of

other ISAs do not limit the application of this ISA

The ISA is effective for audits of financial statements for periods beginning on or

after December 15, 2009

Content of the Practice Note

P1 The Practice Note provides additional guidance for public sector auditors

related to:

a Premise, relating to Management’s Responsibilities, on which an Audit

is Conducted

b Management from whom Written Representations Requested

c Other Written Representations

d Communicating a Threshold Amount

e Doubt as to the Reliability of Written Representations and Requested Written Representations Not Provided

f Additional Examples for Appendix 2 of ISA 580 (Revised and Redrafted) – Illustrative Representation Letter

Applicability of the ISA in Public Sector Auditing

P2 ISA 580 (Revised and Redrafted) is applicable to auditors of public sector

entities in their role as auditors of the financial statements

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All Practice Notes are considered together with General Considerations in the Financial Audit

Guidelines

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Additional Guidance on Public Sector Issues

P3 ISA 580 (Revised and Redrafted) contains application and other explanatory

material with considerations specific to public sector entities in paragraph

A11

Premise, relating to Management’s Responsibilities, on which an Audit is

Conducted

P4 The objectives of a financial audit in the public sector are often broader than

to express an opinion whether the financial statements have been prepared, in

all material respects, in accordance with the applicable financial reporting

framework (i.e., the scope of the ISAs) The audit mandate, or obligations

arising from legislation, regulation, ministerial directives, government policy

requirements, or resolutions of the legislature may result in additional

objectives These additional objectives may include audit and reporting

responsibilities, for example, relating to reporting whether the auditor found

any instances of non-compliance with authorities including budget and

accountability and/or reporting on the effectiveness of internal control

P5 In the public sector management’s responsibilities may also be broader than

those responsibilities in the private sector An audit in accordance with ISAs,

however, is conducted on the premise, relating to management’s

responsibilities, set out in ISA 2102 (Redrafted)and referred to in paragraphs

A2-A3 of ISA 580 (Revised and Redrafted) Public sector auditors therefore

may need to consider the premise, relating to management’s responsibilities,

on which the public sector audit is conducted When requesting written

representations about management’s responsibilities, public sector auditors

take this broader premise into account

Management from whom Written Representations Requested

P6 When considering the guidance in A4 of ISA 580 (Revised and Redrafted)

public sector auditors take into account that requirements with regard to

responsibility for preparation and presentation of financial statements may

vary as stipulated by legislation Public sector auditors familiarize themselves

with applicable legislation to identify those from whom written

representations should be requested Public sector auditors may also inform

and agree, at the planning stage, with those charged with governance on those

individuals identified as responsible for providing written representations

Communicating a Threshold Amount

P7 According to Paragraph A16 of ISA 580 (Revised and Redrafted), the auditor

may consider communicating to management a threshold for purposes of the

requested written representations Public sector auditors take into account the

broader public sector perspective by which they may be required to

communicate all misstatements, even those that have been corrected by the

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ISA 210 – Agreeing the Terms of Audit Engagements

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entity, and all control deficiencies, and instances of non-compliance with

authorities For purposes of requesting written representations public sector

auditors may consider communicating such requirements

Date of and Period(s) Covered by Written Representations

P8 As stated in paragraph A17 the date of the written representations should be

as near as practical to the date of the auditor’s report on the financial

statements In the public sector management representations may sometimes

be obtained from high governance levels and it is therefore important for

public sector auditors to plan in advance so that written representations may

be obtained in time to avoid any delay in issuing the audit report

Doubt as to the Reliability of Written Representations and Requested Written

Representations Not Provided

P9 Public sector auditors may be appointed in accordance with statutory

procedures and, therefore, may not be in a position to decline or resign from

an engagement as suggested in paragraph A26 of ISA 580 (Revised and

Redrafted) In such cases, public sector auditors may report to the legislature

as appropriate

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Appendix 1: Additional Examples for Appendix 2 of ISA

580 (Revised and Redrafted) “Illustrative

Representation Letter”

Appendix 2 of the ISA 580 (Revised and Redrafted) provides an illustrative

example of a representation letter Based on the relevant legislation or audit

mandate public sector auditors may include additional items such as:

Whether the activities and the financial transactions are in compliance

with the authorities that govern them

Whether the internal control systems have functioned effectively

throughout the period covered by the audit

Whether the internal audit function has operated effectively throughout

the period covered by the audit

Whether the government program XYZ has been carried out in an

economical, efficient and effective manner

Whether management has provided its interpretation of compliance

requirements that may have varying interpretations

Whether all contracts, grant agreements and other correspondence in

regard to agreements involving use of program funds has been made

available

Whether management has disclosed all contracts and agreements with

service organizations, including any communication with those service

organizations relating to instances of non-compliance

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ISA 580 (Revised and Redrafted)

April 2008

International

Auditing

and Assurance

Standards Board

Revised and Redrafted International Standard on Auditing

ISA 580, Written Representations

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International Auditing and Assurance Standards Board

International Federation of Accountants

545 Fifth Avenue, 14th Floor New York, New York 10017 USA

This International Standard on Auditing (ISA) 580 (Revised and Redrafted), “Written Representations” was prepared by the International Auditing and Assurance Standards Board (IAASB), an independent standard-setting body within the International Federation of Accountants (IFAC) The objective of the IAASB is to serve the public interest by setting high quality auditing and assurance standards and by facilitating the convergence of international and national standards, thereby enhancing the quality and uniformity of practice throughout the world and strengthening public confidence in the global auditing and assurance profession This publication may be downloaded free of charge from the IFAC website: http://www.ifac.org The approved text is published in the English language

The mission of IFAC is to serve the public interest, strengthen the worldwide accountancy

profession and contribute to the development of strong international economies by establishing and promoting adherence to high quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession’s expertise is most relevant

in academic classrooms or for personal use and are not sold or disseminated and provided that

written permission from IFAC is required to reproduce, store or transmit, or to make other similar uses of, this document, except as permitted by law Contact permissions@ifac.org

ISBN: 978-1-934779-18-7

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INTERNATIONAL STANDARD ON AUDITING 580

(REVISED AND REDRAFTED) WRITTEN REPRESENTATIONS

(Effective for audits of financial statements for periods beginning on or after December 15, 2009)

CONTENTS

Paragraph

Introduction

Scope of this ISA 1-2 Written Representations as Audit Evidence 3-4 Effective Date 5

Objectives 6

Definitions 7-8

Requirements

Management from whom Written Representations Requested 9 Written Representations about Management’s Responsibilities 10-12 Other Written Representations 13 Date of and Period(s) Covered by Written Representations 14 Form of Written Representations 15 Doubt as to the Reliability of Written Representations and Requested Written

Representations Not Provided 16-20

Application and Other Explanatory Material

Written Representations as Audit Evidence A1 Premise, relating to Management’s Responsibilities, on which an Audit is Conducted A2-A3 Management from whom Written Representations Requested A4-A8 Written Representations about Management’s Responsibilities A9-A11 Other Written Representations A12-A15 Communicating a Threshold Amount A16 Date of and Period(s) Covered by Written Representations A17-A20 Form of Written Representations A21-A23 Communication with Those Charged with Governance A24 Doubt as to the Reliability of Written Representations and Requested Written

Representations Not Provided A25-A29

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INTERNATIONAL STANDARD ON AUDITING 580 (REVISED AND REDRAFTED)

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Appendix 1: List of ISAs Containing Requirements for Written Representations

Appendix 2: Illustrative Representation Letter

International Standard on Auditing (ISA) 580 (Revised and Redrafted), “Written Representations” should be read in conjunction with [proposed] ISA 200 (Revised and Redrafted), “Overall Objective of the Independent Auditor, and the Conduct of an Audit in Accordance with International Standards on Auditing.”

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INTERNATIONAL STANDARD ON AUDITING 580 (REVISED AND REDRAFTED)

5

Introduction

Scope of this ISA

1 This International Standard on Auditing (ISA) deals with the auditor’s responsibility to obtain written representations from management and, where appropriate, those charged with governance

2 Appendix 1 lists other ISAs containing subject-matter specific requirements for written representations The specific requirements for written representations of other ISAs do not limit the application of this ISA

Written Representations as Audit Evidence

3 Audit evidence is all the information used by the auditor in arriving at the conclusions on which the audit opinion is based.1 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

(Ref: Para A1)

4 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 fulfillment of management’s responsibilities, or about specific assertions

Effective Date

5 This ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009

Objectives

6 The objectives of the auditor are:

(a) To obtain written representations from management that management believes that

it has fulfilled the fundamental responsibilities that constitute the premise on which

an audit is conducted; (Ref: Para A2-A3)

(b) To support other audit evidence relevant to the financial statements or specific assertions in the financial statements by means of written representations if determined necessary by the auditor or required by other ISAs; and

(c) To respond appropriately to written representations provided by management or if management does not provide the written representations requested by the auditor

1 [Proposed] ISA 500 (Redrafted), “Considering the Relevance and Reliability of Audit Evidence,” paragraph [3]

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