AA – Nov 2023 – L2 – Q4c – Completion Procedures and Reporting, Audit and Assurance Evidence

This question explains the auditor's actions if management refuses to provide representations.

Question

ISA 580: Written Representations guides the use of management representations as audit evidence, the procedures to be applied in evaluating and documenting management representations, and the action to be taken if management refuses to provide appropriate representations.

Required:
Explain the action to be taken by the auditor if management refuses to provide representations.
(3 marks)

Answer

If management refuses to provide necessary representations for audit purposes, the auditor should consider this a scope limitation. The following actions should be taken:

Discuss with Management and Audit Committee: The auditor should first discuss the refusal with management (and the audit committee, if applicable) to understand the reasons for the refusal.
Reconsider Audit Evidence: The auditor should review whether sufficient and appropriate audit evidence can be obtained from other sources to support the audit conclusions, especially if the representation is critical to the audit.
Qualify or Disclaim Opinion: If the refusal is unresolved and represents a significant limitation, the auditor should issue a qualified or disclaimer of opinion based on the severity of the limitation.

Tags: ISA 580, Qualified Opinion, Scope Limitation, Written representations
Level: Level 2

Topic: Audit and Assurance Evidence, Completion Procedures and Reporting
Series: NOV 2023

Uploader: Dotse