- 30 Marks
AA – May 2023 – L2 – SA – Q1 – Audit Evidence
Explaining objectives and steps in obtaining written representation and handling contradictions in audit evidence.
Question
Promise and Treasure are two good childhood friends. After their secondary education, Promise traveled abroad to further his education and obtained his degrees there. Treasure attended a university in Nigeria and graduated with a second-class lower degree. During his time abroad, Promise met some foreign associates and decided to start a company in Nigeria with Treasure.
The company, named Promise and Treasure Company Nigeria Limited, specializes in importing steel products with future plans to set up a local factory. The first-year accounts were prepared as of December 31, 2020. Your firm has been appointed as auditors for the company. Upon completing the audit, you requested a written representation from management. The Managing Director found this request unusual, as he believed all necessary information and documents had already been provided.
Required:
a. Explain to the Managing Director the objectives of the auditor in obtaining a written representation as per ISA 580. (4 Marks)
b. State the steps the auditor should take if a representation by management is contradicted by other audit evidence. (6 Marks)
c. State THREE matters that are required of management in the letter of representation in line with ISA 580, requiring specific representation from management. (3 Marks)
d. Highlight SEVEN aspects of the form and contents of a letter of representation. (14 Marks)
e. State the steps the auditor should take if management refuses to provide the requested written representation. (3 Marks)
Find Related Questions by Tags, levels, etc.