Written Representations

Objective

Objective

The objective of this project was to revise ISA 580, Management Representations. The IAASB approved ISA 580 (Revised and Redrafted), Written Representations in December 2007. The ISA was published in April 2008 after the Public Interest Oversight Board has confirmed that due process was followed in its development. The ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009. A Basis for Conclusions provides background to the project, main comments received on the exposure draft, and the IAASB's conclusions regarding these comments in developing the final standard.

Background

Reasons for revising ISA 580 included the following:

  • The need to limit possible overreliance on representations by auditors;
  • The need to establish why auditors require representations;
  • The need to establish what evidence representations provide; and
  • The need to determine who should provide representations.



The IAASB approved the project proposal in April 2004.

An issues paper was considered in June 2005.

The IAASB conducted a first read of a proposed ISA 580 (Revised and Redrafted) in March 2006.

Issues raised by the IAASB Consultative Advisory Group were discussed by the IAASB in July 2006.

The IAASB conducted a second read of the proposed ISA in October 2006.

The IAASB approved the exposure draft of proposed ISA 580 (Revised and Redrafted) in December 2006. The comment date was April 30, 2007.

Fifty-four comment letters were received. The IAASB discussed a summary of significant comments and reviewed the proposed final ISA in September 2007.

The significant comments included the following:

  • The fundamental premise, relating to management' responsibilities, on which an audit is conducted;
  • Written representations about the premise and other written representations;
  • Written representations as audit evidence;
  • Unreliable written representations / refusal to provide written representations;
  • Who should provide written representations;
  • Date of the written representations; and
  • A threshold amount for written representations.



The IAASB approved ISA 580 (Revised and Redrafted) in December 2007.