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Microlesson · 5-min read

Date, Form, Doubt About Reliability & Consequences of Non-Provision

## SA 580: Date, Form, Reliability & Non-Provision of Written Representations

### Date & Period Covered

RequirementRule
Date of WRAs near as practicable to, but not after, the date of the auditor's report
Period coveredAll financial statements and period(s) referred to in the auditor's report
Timing constraintAuditor cannot express opinion or date the report before the WR is received
New managementStill responsible for the whole period – must provide WR covering all relevant periods

> Why this rule? The auditor is concerned with events up to the report date – WRs must cover that same horizon.

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### Form of Written Representations

  • Must be a representation letter addressed to the auditor
  • If law/regulation requires management to make written public statements about its responsibilities, and those cover the required representations, those matters need not be repeated in the representation letter

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### Doubt About Reliability – ECID Framework

If the auditor has concerns about management's:

  • E – Ethical values
  • C – Competence
  • I – Integrity
  • D – Diligence

...or its commitment to/enforcement of these, the auditor must assess the effect on reliability of both WR and audit evidence generally.

If WR are inconsistent with other audit evidence:

1. Perform audit procedures to resolve the matter

2. If unresolved → reconsider ECID assessment of management

3. If WR concluded unreliable → take appropriate action, including considering a disclaimer of opinion (SA 705)

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### When Requested WR Are Not Provided – DAR

StepAction
D – DiscussDiscuss the matter with management
A – Appropriate actionDetermine possible effect on audit opinion per SA 705 (including disclaimer of opinion)
R – Re-evaluateRe-evaluate integrity of management and effect on reliability of all representations and audit evidence

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### When Disclaimer of Opinion is Mandatory

The auditor shall (mandatory) disclaim an opinion if either condition is met:

(a) Sufficient doubt about management's integrity such that WR about management's responsibilities (FS preparation and completeness of information) are not reliable

OR

(b) Management does not provide the WR relating to:

  • Fulfilling responsibilities for FS preparation
  • Information provided and completeness of transactions

> This is a 'shall' requirement – it is mandatory, not discretionary.

Worked example

### Example 1

Date of WR: The auditor's report for Gupta Co. is to be dated March 31. When must the WR be dated? On or before March 31 (as near as practicable). The auditor cannot issue or date the report before receiving the signed WR. A WR dated April 5 would be invalid.

### Example 2

Non-provision of WR: Management of Kapoor Ltd refuses to provide a WR confirming all transactions are recorded. DAR approach: (D) Discuss with management; (A) Since this concerns the fundamental responsibility for FS completeness, issue a disclaimer of opinion under SA 705 – this is mandatory, not optional; (R) Re-evaluate management integrity and its effect on all other audit evidence.

### Example 3

Inconsistent WR: Management's WR states no significant related-party transactions occurred, but the auditor has evidence of several undisclosed RPTs. Steps: (1) Perform additional procedures to resolve the inconsistency; (2) If unresolved, reconsider management's integrity/competence (ECID); (3) If WR deemed unreliable, consider disclaimer of opinion per SA 705.

⚠️ Common exam mistakes

  • Dating the WR after the auditor's report date – this is not permitted under any circumstances.
  • Thinking new management can refuse to provide WR for periods before they joined – they are still responsible for the whole period and must provide WR covering it.
  • Issuing a qualified opinion instead of a disclaimer when management refuses to provide WR on management responsibilities – non-provision of this specific WR requires a DISCLAIMER, not a qualified opinion.
  • Applying DAR steps selectively – all three steps (Discuss, Appropriate action, Re-evaluate) must be applied.
  • Jumping straight to modifying the opinion when WR are inconsistent with other evidence – additional audit procedures must be performed first to attempt resolution.
  • Treating the ECID mnemonic as only relevant to 'doubt' situations – it also governs the re-evaluation step when inconsistencies are unresolved.
Bare-Act text Disclaimer of Opinion · SA 580 – Written Representations · click to expand
The auditor shall disclaim an opinion on the financial statements in accordance with SA 705 if: (a) the auditor concludes that there is sufficient doubt about the integrity of management such that the written representations about management fulfilling its responsibilities regarding preparation of financial statements and about information provided and completeness of transactions are not reliable; or (b) management does not provide the written representations relating to fulfilling its responsibilities regarding preparation of financial statements and about information provided and completeness of transactions.
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