Auditing and Ethics · Audit Evidence

Specific Audit Evidence: Confirmations, Representations, Experts and Estimates

Updated 4 October 2026 · Fact-checked

Specific audit evidence covers evidence from external confirmations (SA 505), management's written representations (SA 580), an auditor's expert (SA 620) and accounting estimates (SA 540). To answer, name the standard, state the auditor's duty, say what to do if evidence is unreliable or refused, and conclude on the effect on the audit.

Understand Specific Evidence: Confirmations, Representations, Experts, Estimates

SA 500 says the auditor must get sufficient appropriate audit evidence. Some areas need special handling because the evidence is outside the auditor's reach, depends on management's word, needs special skill, or involves judgment. This topic covers four such areas.

External confirmation (SA 505) is evidence obtained as a direct written reply from a third party, such as a bank, debtor or creditor, sent to the auditor on paper or electronically. The auditor controls the request and the reply. If management asks the auditor not to send a confirmation request, the auditor must ask why and look for evidence on the validity of management's reasons. If the reasons are valid, the auditor uses alternative procedures. If the refusal is unreasonable, the auditor must communicate with those charged with governance, whatever the alternative procedures show, and still tries alternative procedures. If alternative procedures do not give relevant and reliable evidence, the auditor also communicates with those charged with governance. The auditor determines the implications for the audit and the opinion under SA 705 only when the refusal is unreasonable or the alternative procedures do not give relevant and reliable evidence. If the reasons are valid and the alternative procedures give adequate evidence, this step does not arise.

Written representations (SA 580) are statements from management to the auditor, given to confirm certain matters or to support other evidence. They are needed, but they are not sufficient appropriate evidence on their own for any matter. They also do not replace other evidence the auditor expected to get. Management must confirm that it has fulfilled its responsibility for the financial statements and has given the auditor all information and access. The letter covers all financial statements and period(s) referred to in the auditor's report. If management does not provide the required representations, or doubts about its integrity arise, the auditor discusses the matter with management and those charged with governance, reevaluates management's integrity and the reliability of other evidence, and takes appropriate action, including determining the effect on the opinion under SA 705.

A disclaimer is not the result of every missing representation. It is mandatory only in two cases: management does not provide the representations about its responsibilities (for the financial statements, and for information and access), or its integrity is in such serious doubt that those representations are unreliable. In these cases, after the discussion and reevaluation above, the auditor shall disclaim an opinion under SA 705. For any other representation that is not given, the auditor determines the effect on the opinion under SA 705. The result may be a qualification or a disclaimer, depending on the matter. The auditor also considers withdrawing from the engagement where permitted by law or regulation.

Auditor's expert (SA 620) is a person or firm with expertise in a field other than accounting or auditing, whose work the auditor uses as evidence. Examples are a valuer or an actuary. The auditor evaluates the expert's competence, capabilities and objectivity, understands the expert's field, agrees the scope of work, and evaluates whether the work is adequate for the audit. The auditor does not refer to the expert in an unmodified report, unless law or regulation requires such a reference. If it is required, the report should state that the reference does not reduce the auditor's responsibility. In a modified report, the auditor may refer to the expert if it is relevant to understanding the modification, and should state that this does not reduce the auditor's responsibility. The auditor alone remains responsible for the opinion.

Accounting estimates (SA 540) are amounts, such as provisions or fair values, that cannot be measured precisely. The auditor assesses risk using the inherent risk factors: estimation uncertainty, complexity, subjectivity and other inherent risk factors. Management bias affects the susceptibility of an estimate to misstatement, so the auditor stays alert to it. Under revised SA 540, the auditor then designs and performs further procedures responsive to the assessed risks. These include testing how management made the estimate, developing a point estimate or range, and, where relevant, considering events occurring up to the date of the auditor's report. The auditor also evaluates, based on the audit evidence obtained, whether the accounting estimates and related disclosures are reasonable or misstated, and obtains written representations about the estimates. SA 501 adds specific considerations: attending physical inventory counting, inquiring about litigation and claims, and obtaining segment information.

Key rules to remember

SA 505 - confirmation rule: Auditor controls selection, sending and receipt of the request and reply; A reply that comes through management is not a proper external confirmation. Treat it as less reliable.
SA 505 - management refuses a request: Ask why → judge validity → if valid, alternative procedures; if refusal is unreasonable, communicate with TCWG and still try alternative procedures → if reliable evidence cannot be obtained from alternative procedures, communicate with TCWG → determine implications under SA 705 only if the refusal is unreasonable or alternative procedures do not give relevant and reliable evidence; Write all three outcomes in a theory answer. Communication with TCWG is required when the refusal is unreasonable, even before you see what the alternative procedures give. If the reasons are valid and alternative procedures give adequate evidence, no SA 705 implication arises.
SA 505 - non-response: No reply → follow-up request → alternative procedures (e.g., subsequent receipts, shipping documents); Alternative procedures depend on the assertion tested.
SA 580 - status of representations: Written representations are necessary but not sufficient evidence; They cannot replace other evidence that should exist.
SA 580 - date of representation letter: Date as near as practicable to, but not after, the date of the auditor's report; The letter covers all financial statements and period(s) referred to in the auditor's report.
SA 580 - responsibility representations not given: Management does not give the responsibility representations, or integrity is in serious doubt so those representations are unreliable → after discussion and reevaluation, disclaim an opinion under SA 705 (mandatory); consider withdrawal where permitted by law or regulation; The disclaimer is mandatory only in these cases. For other representations not given, determine the effect on the opinion under SA 705. A disclaimer does not follow automatically. Withdrawal is considered only where law or regulation permits it.
SA 620 - evaluating the expert: Competence + Capabilities + Objectivity; Then evaluate whether the expert's work is adequate for the audit.
SA 540 - responses to assessed risk: Test how management made the estimate | Develop a point estimate or range | Events up to report date (where relevant); Under revised SA 540, design further procedures responsive to assessed risks, using one or a combination of these three approaches. Then evaluate, based on the evidence, whether the estimates and related disclosures are reasonable or misstated, and obtain written representations about the estimates.
SA 501 - inventory: If inventory is material, attend physical counting unless impracticable; If attendance is impracticable, perform alternative procedures. If still no evidence, modify the opinion.

How to solve Specific Evidence: Confirmations, Representations, Experts, Estimates questions

Use this order for any question on specific audit evidence, whether it is a case or a theory question.

1Identify which standard applies: confirmation (SA 505), representation (SA 580), expert (SA 620), estimate (SA 540) or inventory/litigation (SA 501).
2State the auditor's basic duty under that standard in one or two lines.
3Apply the facts: who controlled the evidence, how reliable is it, and what is missing.
4List the specific procedures the auditor should perform, in the order of the standard.
5Say what happens if evidence is refused, unreliable or not received, such as alternative procedures.
6Judge the effect on the audit: communication with TCWG, modified opinion or disclaimer, if needed.
7Close with a one-line conclusion that the auditor alone is responsible for the opinion.

Quickest way: Standard, Duty, Gap, Effect

When to use it: Use this in the exam hall for both MCQs and written answers when time is short.

MCQs: spot the keyword. 'Third party reply' means SA 505. 'Management's statement' means SA 580. 'Valuer or actuary' means SA 620. 'Provision or fair value' means SA 540.
Eliminate options that say representations alone are enough, that the report must always name the expert, or that the auditor may skip all alternative procedures.
Remember the expert rule: no reference to the expert in an unmodified report unless law or regulation requires it (then the report states that this does not reduce the auditor's responsibility). In a modified report, a reference may be made if relevant to understanding the modification, and it does not reduce the auditor's responsibility.
For written answers, write four short lines: Standard, Auditor's duty, What if evidence is missing, Effect on opinion.
Use the standard's own verbs: evaluate, obtain, request, communicate, consider. They match marking points.
Always finish with the responsibility line: the auditor's opinion is the auditor's own.

Common mistakes in Specific Evidence: Confirmations, Representations, Experts, Estimates

Treating a management representation letter as enough evidence for a material matter.
The letter looks formal and signed, so students think it closes the issue.
Fix: Write that SA 580 representations are necessary but not sufficient. They support, not replace, other evidence.
Accepting a confirmation reply that came through management.
Students focus on the content of the reply, not the route it took.
Fix: The auditor must control sending and receipt. A reply routed through management is less reliable, so do more work.
Saying the auditor can reduce responsibility by relying on an expert.
Students confuse the expert's role with sharing the audit opinion.
Fix: State that under SA 620 the auditor alone is responsible for the opinion. Using an expert does not reduce it.
Skipping the evaluation of the expert's competence, capabilities and objectivity.
Students jump to using the expert's report.
Fix: Always list the three checks first, then scope of work, then adequacy of work.
Ignoring management bias when auditing an estimate.
Students treat estimates as simple calculations to recheck.
Fix: Under SA 540 look for indicators of bias and consider if they signal a misstatement or fraud risk.
Forgetting alternative procedures when inventory counting or a confirmation is not possible.
Students stop at 'not possible' without the next step.
Fix: Write the sequence: try alternative procedures, and if still no evidence, consider modifying the opinion.

Worked examples

Example 1

During the audit of Rao Ltd, management asks the auditor not to send a confirmation request to a major debtor, saying the debtor is in dispute with the company. What should the auditor do as per SA 505?

Show the solution

The standard is SA 505. Management has asked the auditor not to send a confirmation request.
The auditor must first ask management for its reasons and look for audit evidence on whether the reasons are valid.
If the reasons are valid, the auditor performs alternative audit procedures to get relevant and reliable evidence about that balance, for example checking subsequent receipts and the correspondence on the dispute. If these give adequate evidence, no implication under SA 705 arises from the refusal.
If the refusal is unreasonable, the auditor must communicate with those charged with governance. This is required whatever the alternative procedures show. The auditor also tries alternative procedures, for example subsequent receipts and other records on the balance.
If the auditor cannot get relevant and reliable evidence from alternative procedures, the auditor also communicates with those charged with governance.
Where the refusal is unreasonable, or alternative procedures do not give relevant and reliable evidence, the auditor determines the implications for the audit and the opinion under SA 705.
The outcome then depends on the effect of any evidence that remains missing. If it is material but not pervasive, the opinion is qualified. If it is material and pervasive, the auditor disclaims an opinion.

Answer: The auditor should ask for and assess management's reasons. If valid, use alternative procedures. If these give adequate evidence, no SA 705 implication arises. If the refusal is unreasonable, communicate with those charged with governance and still try alternative procedures. If reliable evidence cannot be obtained from alternative procedures, also communicate with those charged with governance. In the unreasonable-refusal or no-evidence cases, determine the implications under SA 705: qualified opinion if the effect of missing evidence is material but not pervasive, disclaimer if material and pervasive.

Exam tips

Questions often give a short case and ask 'what should the auditor do'. Name the standard in your first line to earn the identification mark.
For SA 580, write that representations are not sufficient on their own. This point is tested often in both MCQs and theory.
For SA 620, memorise the three evaluation checks: competence, capabilities, objectivity. Write them as a list.
For SA 540, mention estimation uncertainty, complexity, subjectivity and other inherent risk factors, and note that management bias affects susceptibility to misstatement. Then name the responses: test how management made the estimate, develop a point estimate or range, and consider events up to the report date where relevant.
Link inventory and litigation questions to SA 501: attend the count, inquire with legal counsel, and consider alternative procedures if attendance is not possible.

Practice questions from Audit Evidence

Specific Evidence: Confirmations, Representations, Experts, Estimates in other exams

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

CA FinalSA 505 External Confirmation Procedures

Specific Evidence: Confirmations, Representations, Experts, Estimates: frequently asked questions

What is the difference between SA 505 and SA 580?

SA 505 covers evidence the auditor gets directly from third parties, such as banks and debtors. SA 580 covers written statements from management. Third-party confirmations are generally more reliable than management's own statements.

Can the auditor rely only on a management representation letter?

No. Under SA 580 written representations do not provide sufficient appropriate audit evidence on their own. The auditor must still collect other evidence on the matter.

Does the auditor mention the expert in the audit report?

In an unmodified report, the auditor does not refer to the expert's work, unless law or regulation requires it. In that case the report should state that the reference does not reduce the auditor's responsibility. In a modified report, the auditor may refer to the expert if it is relevant to understanding the modification, and should state the same.

What does SA 540 ask the auditor to focus on?

It asks the auditor to assess risks of material misstatement in accounting estimates, considering estimation uncertainty, complexity, subjectivity and other inherent risk factors. Management bias affects how susceptible an estimate is to misstatement. The auditor then designs responses to those risks and evaluates whether the estimates are reasonable.