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ACCA Applied Skills · Audit and Assurance

Written Representations for ACCA Audit and Assurance

A written representation is a written statement from management to the auditor, confirming matters or supporting other audit evidence. Under ISA 580 you request one letter near the audit's end, dated close to the audit report date. If management refuses or the statements seem unreliable, you consider the effect on your opinion.

What this chapter covers

This chapter covers how auditors obtain formal written statements from management and those charged with governance. It is based on ISA 580 Written Representations. You learn what a representation is, which ones the auditor must obtain, how the letter is laid out and timed, and what to do when management will not cooperate.

The chapter sits late in the audit process. You gather evidence through risk assessment, controls, substantive procedures and the completion stage. Written representations are then used to confirm management's responsibilities and to support evidence already gathered. They link directly to the completion and review topics, going concern, subsequent events, and the audit report and modified opinions.

The content is fairly compact and rule-based, so it is easy to learn well. You can expect it in objective test cases, where a scenario asks what the auditor should do, and in written questions on completion procedures or on audit reporting.

Written representations are a reliable source of marks because the rules are short and the exam tests them in predictable ways. In objective questions you must pick the correct action, and these are marked all or nothing. In written questions, you may be asked to list matters to include in a letter or to explain the effect of a refusal. The chapter also supports your answers on completion, going concern, subsequent events and modified opinions, so learning it well helps elsewhere in the paper.

Written representations: topics in the order to study them

  1. 1Written Representations: Meaning and PurposeStart with what a representation is and why it is requested, because the later rules depend on this idea.
  2. 2Management Responsibilities and Required RepresentationsNext learn the specific matters the auditor must obtain, which is the most heavily tested content.
  3. 3Letter of Representation: Form, Timing and ContentOnce you know what is needed, learn how it is presented, who signs it, and when it is dated.
  4. 4Doubts About Reliability and Refusal to Provide RepresentationsFinish with the problem cases, which build on everything before and link to audit opinions.

How to prepare Written representations

This chapter rewards clear understanding of a few rules, then practice applying them to short scenarios.

  1. Read the purpose of written representations and write one sentence on why they are not sufficient evidence on their own.
  2. Learn the required representations: management's responsibility for the financial statements, for providing complete information, and for the completeness of transactions recorded.
  3. Practise listing typical letter content for a scenario: items such as unadjusted misstatements, related parties, subsequent events, going concern and litigation.
  4. Learn the form and timing: addressed to the auditor, signed by appropriate senior people, and dated as near as practicable to, but not after, the date of the auditor's report.
  5. Work through the refusal and reliability cases, and state the effect on the audit opinion for each.
  6. Do objective test questions on the topic and check why each wrong option is wrong.
  7. Answer one written question under time pressure, using a clear structure of point, reason and consequence.

Common mistakes in Written representations

  • Treating a representation letter as enough evidence for a material balance.

    Fix: Remember it is management's own statement. It supports other evidence but cannot replace evidence the auditor could normally obtain.

  • Dating the letter after the audit report or well before it.

    Fix: Say it is dated as near as practicable to, but not after, the date of the auditor's report, so it covers the whole period up to that date.

  • Listing the letter's contents as generic audit matters without linking them to the scenario.

    Fix: Pick matters that match the scenario, such as a lawsuit, a related party or a post year-end event, and say why each is relevant.

  • Saying the auditor should always issue a modified opinion if any representation is refused.

    Fix: Distinguish refusal of the required representations on management's responsibilities, which is serious, from other matters, where you assess the effect on evidence and reliability.

  • Ignoring the reliability of management once a representation conflicts with other evidence.

    Fix: State that the auditor investigates, and considers whether other representations are still reliable and whether integrity concerns exist.

Last-day revision: Written representations

  • A written representation is a written statement by management provided to the auditor to confirm certain matters or support other audit evidence.
  • Representations are not sufficient appropriate evidence on their own about any matter other than management's responsibilities.
  • Auditors request representations that management has fulfilled its responsibility for preparing the financial statements.
  • Auditors request confirmation that management has provided all relevant information and access, and that all transactions are recorded.
  • The letter is addressed to the auditor.
  • It is dated as near as practicable to, but not after, the date of the auditor's report.
  • It is signed by those with appropriate responsibility, often the directors or senior management.
  • Additional representations may cover matters such as related parties, subsequent events, litigation and going concern.
  • If representations conflict with other evidence, investigate and reconsider the reliability of management and of other representations.
  • If management refuses to provide the required representations, discuss with them, reassess their integrity, and consider the effect on the opinion.
  • If management's responsibility representations are not provided, the auditor disclaims an opinion where appropriate.

Written representations in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Written representations: frequently asked questions

What is a letter of representation in audit?

It is a written statement from management to the auditor, confirming matters and supporting other audit evidence. It is requested near the end of the audit and is usually signed by directors or senior management.

Who signs the letter of representation?

It is signed by those with appropriate responsibility for the financial statements and knowledge of the matters concerned. In practice that usually means the directors or senior management.

What happens if management refuses to give a written representation?

The auditor discusses the matter with management, reassesses their integrity and the reliability of other evidence, and takes appropriate action. This may include modifying the opinion or disclaiming an opinion, depending on the matter.

How is written representations tested in ACCA Audit and Assurance?

It appears in objective test cases asking for the correct action in a scenario, and in written questions on completion or reporting. You may need to list letter content or explain the effect on the opinion.