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CA Intermediate · Auditing and Ethics · Completion and Review

Auditor CA Rohan is finalising the audit of Sagar Pharma Ltd. Management declines to provide a written representation that it has provided all relevant information and access, as agreed in the engagement terms. Management insists that oral confirmation was already given in meetings. What is the correct audit response under SA 580?

The auditor should treat the refusal as a serious matter, reassess management's integrity and the reliability of other representations, and consider the effect on the opinion, which can lead to a disclaimer. Oral assurances do not replace written representations, and an Emphasis of Matter does not cure the refusal.

  1. AAccept the oral confirmation as sufficient, since representations are not audit evidence
  2. BTreat it as a matter that raises doubt about management's integrity, reconsider reliability of other representations, and take appropriate action including the effect on the opinion, which may include disclaimerCorrect
  3. CIssue an unmodified opinion but mention the refusal in the Emphasis of Matter paragraph
  4. DObtain representation from the internal auditor instead and treat it as a full substitute

Explanation

If management does not provide the required representations on its responsibilities, SA 580 requires the auditor to discuss the matter, reevaluate management's integrity and the reliability of other representations and evidence, and take appropriate action, including determining the effect on the opinion. A disclaimer is required where the refusal is on these core responsibilities. Oral confirmation does not replace written representation, and an internal auditor cannot substitute for management.

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