Written representations – NBC Institute

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

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

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

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

Question

GGC Co. Ltd (GGCL) specializes in manufacturing equipment which can help to reduce toxic emissions in the production of chemicals. The company has grown rapidly over the past eight years, and this is partly due to the warranties that the company gives to its customers. It guarantees its products for five years, and if problems arise during this period, it undertakes to fix them or provide a replacement.

You are the manager responsible for the audit of GGCL, and you are performing the final review stage of the audit and have come across the following issues:

Receivable balance owing from Nhyira Co. Ltd
GGCL has a material receivable balance owed by its customer, Nhyira Co. Ltd. During the year-end audit, your team reviewed the aging of this balance and found that no payments had been received from Nhyira Co. Ltd for over six months. GGCL would not allow this balance to be circularized. Instead, management has assured your team that they will provide a written representation confirming that the balance is recoverable.

Warranty provision
The warranty provision included within the statement of financial position is material. The audit team has performed testing over the calculations and assumptions which are consistent with prior years. The team has requested a written representation from management confirming that the basis and amount of the provision are reasonable. Management is yet to confirm acceptance of this representation.

Required:

Describe the audit procedures required in respect of accounting estimates.
(8 marks)
For each of the two issues above:
i) Discuss the appropriateness of written representations as a form of audit evidence; and
(6 marks)
ii) Describe additional procedures the auditor should now perform in order to reach a conclusion on the balance to be included in the financial statements.
(6 marks)

(Total: 20 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting estimates, Audit evidence, Audit Procedures, Receivables, Warranty provision, Written representations
Level: Level 3

Topic: Audit evidence, Evaluation and review
Series: MAY 2020

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

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

Answer

Find Related Questions by Tags, levels, etc.

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

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

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

Question

You are the manager responsible for the audit of GGCL, and you are performing the final review stage of the audit and have come across the following issues:

Required:

Describe the audit procedures required in respect of accounting estimates.
(8 marks)
For each of the two issues above:
i) Discuss the appropriateness of written representations as a form of audit evidence; and
(6 marks)
ii) Describe additional procedures the auditor should now perform in order to reach a conclusion on the balance to be included in the financial statements.
(6 marks)

(Total: 20 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting estimates, Audit evidence, Audit Procedures, Receivables, Warranty provision, Written representations
Level: Level 3

Topic: Audit evidence, Evaluation and review
Series: MAY 2020

Question Tag: Written representations

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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.

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

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.

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

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Question Tag: Written representations

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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.

You're reporting an error for "AA – Nov 2023 – L2 – Q4c – Completion Procedures and Reporting, Audit and Assurance Evidence"

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

You're reporting an error for "AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review"

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.

You're reporting an error for "AA – Nov 2023 – L2 – Q4c – Completion Procedures and Reporting, Audit and Assurance Evidence"

AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review

Discusses audit procedures for accounting estimates, the appropriateness of written representations, and additional audit procedures.

You're reporting an error for "AAA – May 2020 – L3 – Q3 – Audit evidence, Evaluation and review"

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