ICAI releases Implementation Guide to SA 580 Written Representations

The Institute of Chartered Accountants of India (ICAI) has recently released an implementation guide to Standard on Auditing (SA) 580 – Written Representations.

Standards on Auditing prescribe the fundamental principles of audit which need to be followed by auditors in audit engagements. The Implementation Guides to Standards on Auditing issued by Auditing and Assurance Standards Board (AASB) are an important resource for auditors to understand the principles and requirements of these Standards. These Implementation Guides help auditors in effective implementation of Standards on Auditing.

Written representations are an important means of obtaining audit evidence. Written representations supplement the other audit evidence obtained by auditors during the course of audit. Standard on Auditing (SA) 580, “Written Representations” prescribes the basic principles of written representations. These principles need to be followed by auditors while complying with the requirements of SA 580 and the specific requirements of written representations prescribed by other Standards on Auditing.

“The purpose of this Implementation Guide is to provide practical guidance on implementation of the principles laid down in Standard on Auditing (SA) 580, “Written Representations” (hereinafter referred as “the Standard”). The Standard is effective for audits of financial statements for periods beginning on or after April 1, 2009”, the guide stated.

The Standard deals with the auditor’s responsibility to obtain written representations from management and, where appropriate, those charged with governance.

The implementation guide contains Objectives and Definitions, Procedural requirements to be followed by auditors along with Application and Other Explanatory Material.

The topics of coverage include Responsibilities of the auditor to obtain written representations in an audit of financial statements, Written Representations as Audit Evidence, Effective date of the Standard, Objectives of the Auditor, definition of Written representations, explanations to: —

• Management from whom written representations requested.

• Written representations about management’s responsibilities in respect of preparation of the financial statements, information provided and completeness of transactions and description of management’s responsibilities.

• Other written representations.

• Date of and period(s) covered by written representations.

• Form of written representations.

• Doubt as to the reliability of written representations and requested written representations not provided.

It also contains Application and Other Explanatory Material that provides explanations on various aspects of written representation and auditor’s response.

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