SA 580 — Written Representations

Example 1 — Identifying What Goes in the Letter

Ms. Iyer is auditing TechBridge Solutions Ltd. for FY 2024–25. During the audit, she identifies three matters needing management confirmation:

• Unrecorded contingent liability of ₹12,00,000 related to a tax dispute
• Inventory valued at ₹45,00,000 — management's assertion that it is all realisable above cost
• A loan waiver of ₹8,00,000 from a related party not yet reflected in books

Working:

Step 1 — Mandatory representations (always included):

→ Management's responsibility for financial statements ✓

→ Completeness of information provided to auditor ✓

Step 2 — Specific representations for material matters:

→ Contingent liability of ₹12,00,000: management to confirm it has been properly disclosed under Ind AS 37

→ Inventory ₹45,00,000: management to confirm NRV ≥ cost for all items

→ Loan waiver ₹8,00,000: management to confirm completeness of related-party disclosures

Step 3 — Date of letter:

→ Auditor's report is signed on 15 May 2025, so the representation letter must be dated on or before 15 May 2025 (not after).

Final Answer: The management representation letter covers 2 mandatory + 3 specific items, dated on or before 15 May 2025.

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Example 2 — Management Refuses to Sign

Mr. Sharma, auditor of BuildRight Infra Pvt. Ltd., requests the management letter. The promoter-director refuses, saying

• Students think written representations are the primary source of evidence — they are not. They are one form of evidence and must be supported by corroborating procedures wherever possible. Never write in an exam answer that