CFAB 2 - Chapter 12

According to ISA (UK) 580, 'Written Representations' which THREE of the following is an auditor required to confirm in writing with management?

• A. Management's belief that it has fulfilled its responsibility for the preparation of financial

  statements

• B. All transactions have been reflected in the financial statements

• C. The fact that management has provided the auditor with all relevant information

• D. Management's agreement of the level of materiality used during the audit

According to ISA (UK) 580, 'Written Representations' which TWO of the following must auditors obtain written representations about?

• A. Material matters where other evidence cannot reasonably be expected to exist

• B. Material matters where other evidence is missing due to an emergency such as a fire

• C. Management's belief that it has fulfilled its responsibility for the preparation of the financial statements

• D. That the financial statements record and reflect all transactions

For each of the following statements concerning written representations, select whether they are true or false.

1. 1. The auditor should evaluate whether the representations appear reliable and are consistent with other evidence obtained before they are relied on as audit evidence.

2. 2. Written representations are appropriate evidence when evidence the auditors expected to

   be available is unavailable.

3. 3. If written representations given do not agree with other evidence, auditors should not trust any other representations made by management during the course of the audit.

• A. True - True - False

• B. False - True - False

• C. False - False - True

• D. True - False - False

Auditors seek written representations from management to support oral representations that have been made during the course of the audit.

For each of the following in relation to a statutory audit, select whether a written representation is required or not required.

The directors have fulfilled their responsibility for the preparation of the financial statements.

• Required

• Not required

Auditors seek written representations from management to support oral representations that have been made during the course of the audit.

For each of the following in relation to a statutory audit, select whether a written representation is required or not required.

The accounting policies selected and applied by management are appropriate.

• Required

• Not required

Auditors seek written representations from management to support oral representations that have been made during the course of the audit.

For each of the following in relation to a statutory audit, select whether a written representation is required or not required.

A material item, subject to management judgement, for which no other evidence could reasonably be expected to exist.

• Required

• Not required

Written representations may be sought as audit evidence.

Which TWO of the following are valid circumstances in which written representations may be required?

• A. To support other evidence about the suitability of accounting policies

• B. Where information which would normally be expected to be available is unavailable

• C. To support inspection of a board minute introducing the directors' intention to sell a

  material investment

• D. When the alternative audit procedure would be too time-consuming

On which TWO of the following matters should an auditor seek written representations?

• A. Whether there are plans to abandon product lines that will result in obsolete inventory

• B. Whether plant and equipment held on the client's premises exists

• C. The existence (or not) of reconciling items between the cash balance in the accounts and the bank statement balance

• D. Whether there are any undisclosed subsequent events

For each of the following statements concerning written representation letters, select whether they are true or false.

1. 1. Written confirmations are required from all client staff who have made oral representations.

2. 2. The matters to be referred to in the written representation letter shall be discussed by the auditor with senior management.

3. 3. Written representation can be used as a substitute for evidence which would be available to the auditor by other means.

• A. False - True - True

• B. False - True - False

• C. True - False - True

• D. True - True - False

Which TWO of the following are purposes of a written representation letter?

• A. Acknowledgement that management has fulfilled its responsibility for the preparation of the financial statements

• B. Provision of evidence in respect of material items where other evidence is available

• C. Acknowledgement by management of its belief that the aggregate of uncorrected misstatements are immaterial to the financial statements

• D. Confirmation by management of the scope of the work to be carried out by the assurance firm

• E. Provision of details of proposed modifications to the auditor's report