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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Completion and final review

Orchid Logistics' audit is complete, and the auditor's report is to be dated 15 March 20X6. The management representation letter is dated 3 March 20X6, and a major customer went into liquidation on 10 March 20X6. Which statement is correct under ISA 580?

The letter should be dated as near as practicable to, but not after, the date of the auditor's report. A letter dated twelve days earlier, before a significant event, should be updated so that it covers events up to the report date.

  1. AThe letter date is acceptable because representations only need to cover the year-end
  2. BThe letter should be dated as near as practicable to, but not after, the date of the auditor's report, so it should be updatedCorrect
  3. CThe letter should be dated after the auditor's report to confirm the report
  4. DThe letter date is irrelevant if the audit committee has reviewed the financial statements

Explanation

ISA 580 requires the representation letter to be dated as near as practicable to, but not after, the date of the auditor's report on the financial statements. A letter dated 3 March leaves a gap including a significant event, so it should be updated. Dating it after the report is not permitted.

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