Chapter 11 Louwers questions.docx - Casandra Davis Chapter 11 Completing the audit Louwer’s questions 11.52 a According to AU 580 it is required that

Chapter 11 Louwers questions.docx - Casandra Davis Chapter...

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Casandra Davis Chapter 11: Completing the audit Louwer’s questions May 30, 2019 # 11.52 a) According to AU 580, it is required that auditors obtain written representations to confirm and support evidence attained in the audit. These letters are usually signed by the CEO and/or the CFO. The date the audit is completed is the date that should be put on the reported date of the financial statements. The following circumstances are a few situations of what could occur between the two dates: - The value of the assets was at a significant risk of impairment - The business disclosed news of discontinuance - Exercises adjustments to long-term debt/ maturing to short-term or related - Disclosure of adjustments to internal controls b) There are three main sections to the written representations, with each containing specific items covered in the section. 1. Addressing the financial statements. In this section, the auditor can except to find information regarding management’s responsibilities for the financial statement, as well as the different internal controls related to the financial statements. 2. An explanation of what information was provided to the auditors and what has been disclosed. 3. An explanation of the effectiveness of their internal controls and any changes within these processes. c) The representations should be addressed to the CPA firm conducting the audit. It should be dated for whenever the audit is completed, which is the audit report date. d) The representation should be signed by the responsible officers of the client, normally the CEO or the CFO, and other appropriate officers. The refusal results in constituting scope limitation which requires a qualification in the auditor’s report on the entity’s financial statements or a disclaimer of opinion. e)
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Written representations cannot act at substitutes for corroborative evidence. However, in some cases, they are the only evidence available.
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