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CS Professional · Compliance Management, Audit and Due Diligence · Audit Principles and Techniques

In the audit of Narmada Steel Ltd, management refuses to give a written representation that the auditor specifically requested on pending litigation. A junior team member says that since no document was received, there is no audit evidence on the matter. Which view is consistent with SA 200?

The refusal itself can be audit evidence. SA 200 states that the absence of information, such as management's refusal to provide a requested representation, is used by the auditor and constitutes audit evidence, alongside information that supports or contradicts management's assertions.

  1. AThe junior is right, because evidence must be a document received
  2. BThe refusal is irrelevant, since only evidence supporting assertions counts
  3. CThe absence of information, such as management's refusal to provide a requested representation, can itself constitute audit evidenceCorrect
  4. DOnly evidence from previous audits can be used in this situation

Explanation

SA 200 says evidence includes information that supports management's assertions and information that contradicts them. In some cases the absence of information, for example management's refusal to provide a requested representation, is used by the auditor and so also constitutes audit evidence. The junior's view is therefore wrong.

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