ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review
During the audit of Kestrel Components for the year ended 31 December 20X5, the audit manager asks the finance director to sign a letter confirming that management has provided all relevant information and that all transactions are recorded. Which of the following best describes the status of this written representation under ISA 580?
This is a required written representation under ISA 580. Management must confirm it has fulfilled its responsibility for the financial statements and has given the auditor all relevant information and access, with all transactions recorded. It supplements, but does not replace, other audit evidence.
- AIt is a required representation confirming management's responsibility for the preparation of the financial statements and the completeness of information providedCorrect
- BIt is optional because the auditor can obtain equivalent evidence from substantive procedures
- CIt is only required for listed entities
- DIt replaces the need for the auditor to perform procedures on completeness of transactions
Explanation
ISA 580 requires the auditor to request representations that management has fulfilled its responsibility for preparing the financial statements and has provided all relevant information and access, and that all transactions are recorded. Representations are not optional, and they do not replace other audit evidence, so the option claiming they replace completeness procedures is wrong.
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