Skip to content

Advanced Auditing, Assurance and Professional Ethics · Review of Financial Information

Evaluating Evidence, Misstatements and Written Representations in a Review (SRE 2400)

Updated 5 October 2026 · Fact-checked

In a review under SRE 2400 (Revised), you evaluate whether the evidence from inquiry and analytical procedures is enough to conclude, accumulate misstatements and judge whether they are material, then obtain written representations from management. If evidence is not enough, you perform more procedures or modify the conclusion. Representations support your work but never replace it.

Understand Evaluating Evidence, Misstatements and Written Representations

A review gives limited assurance. You do mainly inquiry and analytical procedures. You do not test controls or obtain evidence the way an auditor does. So the key question at the end is: do I have enough to state a conclusion in negative form, that nothing has come to my attention making me believe the financial statements are not prepared, in all material respects, in accordance with the applicable financial reporting framework?

You evaluate evidence throughout the work. If the evidence from one procedure contradicts another, or if answers from management look inconsistent or implausible, you do more. You may extend inquiries, add analytical procedures or use other procedures. If you cannot get enough evidence, you cannot give an unmodified conclusion. That is a limitation on scope, and you consider a qualified conclusion, a disclaimer, or withdrawal where possible and appropriate.

Misstatements are accumulated as you go. You judge them against your materiality for the review, individually and in aggregate. Clearly trivial items need not be accumulated. If a misstatement is found or you suspect one, you ask management to correct it. If management refuses or the items remain uncorrected and material, you consider the effect on your conclusion. You also consider whether the uncorrected items are material, and whether they indicate bias or fraud.

You also consider events after the period end up to the date of your report, and the going concern basis. Where events or conditions cast doubt, you ask management about their plans and assess whether the financial statements disclose the matter adequately. If there is a material uncertainty that is adequately disclosed, the conclusion is not modified. If the disclosure is inadequate, you express a qualified or adverse conclusion, depending on materiality and pervasiveness. If the going concern basis is inappropriate, you express an adverse conclusion.

Finally you obtain a written representation from management that they have fulfilled their responsibility for preparing the financial statements, and that they have given you all relevant information and access. Representations are corroborative. They are not a substitute for inquiry or analytical procedures. If management refuses to provide requested representations, you discuss it, reassess their integrity and consider the effect on the conclusion. You may need to disclaim or withdraw.

Key rules to remember

Form of limited assurance conclusion
Nothing has come to my attention that causes me to believe the financial statements are not prepared, in all material respects, in accordance with the applicable framework
Negative form. Use it only when evidence is enough and no material uncorrected misstatement exists.
Misstatement rule
Accumulate misstatements (other than clearly trivial) → ask management to correct → judge individually and in aggregate against materiality → modify the conclusion if material and uncorrected
Management is asked to correct. You do not correct the statements yourself.
Insufficient evidence rule
Evidence not enough → perform further procedures → if still not enough, scope limitation → qualified conclusion or disclaimer, or withdraw where possible
Do not issue an unmodified conclusion on a scope limitation.
Written representation rule
Representations support, but do not replace, inquiry and analytical procedures
If management refuses or integrity is in doubt, consider the effect on the conclusion, including disclaimer or withdrawal.
Subsequent events and going concern
Inquire about events up to the report date → consider adjustment or disclosure → for going concern doubt, assess plans and adequacy of disclosure
A material uncertainty that is adequately disclosed does not modify the conclusion. Inadequate disclosure leads to a qualified or adverse conclusion depending on materiality and pervasiveness. If the going concern basis is inappropriate, the conclusion is adverse.

How to solve Evaluating Evidence, Misstatements and Written Representations questions

Use this order for any scenario question on evaluation, misstatements or representations in a review.

  1. 1Identify the engagement as a review of financial statements under SRE 2400 (Revised) giving limited assurance.
  2. 2List the facts: what evidence was obtained, what is inconsistent, what misstatements were found and their amounts.
  3. 3Compare each misstatement with review materiality, individually and in aggregate. Ignore clearly trivial items.
  4. 4Say what you would do next: ask management to correct, extend inquiries or analytical procedures, or consider subsequent events and going concern.
  5. 5Decide whether evidence is sufficient. If not, state the scope limitation and its effect.
  6. 6State whether the written representations were obtained and whether they are reliable. They cannot replace other evidence.
  7. 7Conclude: unmodified, qualified, adverse or disclaimer, or withdrawal. Give a reason tied to materiality and pervasiveness.

Quickest way: Evidence, Misstatement, Representation, Conclusion

When to use it: Short case MCQs and written answers of about 5 marks where you need a quick, structured answer.

  1. Write the engagement type: review, limited assurance.
  2. Write the issue in one line: weak evidence, uncorrected misstatement, refused representation, or going concern disclosure.
  3. Write the action: more procedures or ask management to correct.
  4. Write the effect on the conclusion if the issue stays unresolved.
  5. Add one line that representations do not replace procedures.

Common mistakes in Evaluating Evidence, Misstatements and Written Representations

  • Treating written representations as sufficient evidence by themselves.

    They come from management and look formal and complete.

    Fix: State that representations are corroborative only. You still need inquiry and analytical procedures.

  • Applying audit language such as reasonable assurance or opinion.

    Students carry over SA 700 style.

    Fix: Use limited assurance and conclusion in negative form.

  • Saying the practitioner corrects the misstatement.

    Confusing the role with preparing the statements.

    Fix: The practitioner asks management to correct. Uncorrected material items affect the conclusion.

  • Ignoring aggregation of small misstatements.

    Each item looks small alone.

    Fix: Judge items individually and in aggregate, and consider whether they show bias.

  • Issuing an unmodified conclusion despite a refusal to give representations.

    Students see it as a formality.

    Fix: Discuss with management, reassess integrity and consider a disclaimer or withdrawal where the refusal is significant.

  • Skipping going concern when only subsequent events are mentioned.

    The two topics are studied separately.

    Fix: Whenever the case shows adverse events, also ask about the entity's plans and the adequacy of disclosure.

Worked examples

Example 1

You are reviewing the financial statements of Kiran Traders Ltd. under SRE 2400 (Revised). Review materiality is ₹5,00,000. You find an uncorrected overstatement of inventory of ₹3,00,000 and an uncorrected understatement of expenses of ₹4,00,000. Both overstate profit. Management declines to correct either. What do you conclude?

Show the solution
  1. Both items are above the clearly trivial level, so accumulate them.
  2. Judge them individually and in aggregate. Individually they are ₹3,00,000 and ₹4,00,000, each below ₹5,00,000, so the individual test alone does not settle the matter.
  3. Check in aggregate. Both overstate profit, so the effect adds up to ₹3,00,000 + ₹4,00,000 = ₹7,00,000.
  4. ₹7,00,000 exceeds review materiality of ₹5,00,000, so the aggregate is material.
  5. Ask management again to correct. They decline, so the misstatements remain uncorrected.
  6. Consider whether the effect is pervasive, that is, its effect on the financial statements as a whole. The misstatements are confined to specific elements (inventory and expenses), so the effect is material but not pervasive. A qualified conclusion is appropriate.

Answer: The uncorrected misstatements total ₹7,00,000 and exceed materiality of ₹5,00,000. The effect is material but not pervasive, since it is confined to specific elements (inventory and expenses) of the financial statements. Issue a qualified conclusion, describing the misstatements and their effect.

Exam tips

  • Use the words limited assurance, conclusion and negative form. Audit wording loses marks.
  • In misstatement cases, always do the aggregate check and show the arithmetic against materiality.
  • For refusal of representations, show a sequence: discuss, reassess integrity, then modify or withdraw.
  • Link inadequate going concern disclosure to a modified conclusion, and state that representations never replace procedures.
  • In MCQs, watch for options that let the practitioner correct statements or rely only on management's word. These are usually wrong.

Practice questions from Review of Financial Information

Evaluating Evidence, Misstatements and 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.

Evaluating Evidence, Misstatements and Written Representations: frequently asked questions

What should I do if I find a material misstatement in a review?

Ask management to correct it. If they do not, and it is material individually or in aggregate, modify your conclusion. Use a qualified conclusion if the effect is material but not pervasive, and an adverse one if the effect is pervasive.

Are written representations enough evidence in a review?

No. They support the other evidence but do not replace inquiry and analytical procedures. If they conflict with other evidence, you investigate further.

What happens if management refuses to give written representations?

Discuss the matter, reassess management's integrity and consider the effect on your conclusion. Where the refusal is significant, you disclaim a conclusion or withdraw where possible.

How does a review deal with subsequent events and going concern?

You inquire about events up to the date of the report and about going concern. If doubt exists, you consider management's plans and whether disclosure is adequate. A material uncertainty that is adequately disclosed does not modify the conclusion. Inadequate disclosure leads to a qualified or adverse conclusion, and an inappropriate going concern basis leads to an adverse conclusion.