Summary of Auditing Standards 580 Management Representation
1. Meaning The representation of management is normally contained in a letter called Letter of representation Or Over all management certificate.
2. Responsibility for the Financial Information: The auditor should obtain a letter from the management acknowledging its responsibility for the preparation of F.S.
3. On what matters judgment + Must matters:
a. The auditor should exercise his professional judgment in determining the matters on which he wishes to obtain such representations in writing.
b. However, representations should be obtained from management in writing on material items when other sufficient & appropriate audit evidence cannot be reasonably expected to exist.
4. During the Course of Audit, The Auditor may receive management representation either unsolicited are in response to specific enquires. The auditor must seek Corroborative evidence and find out whether the management representations are reasonable and consistent
5. Contradiction: If a representation is contradicted by other evidence, the auditor shall modify or increase the audit procedures & reconsider the other representations made by management.
6. The Auditor should document the management representation in his working papers. A written representation is better than oral representation.
8. A management representation must be dated, addressed to auditor and signed by the members of the management like M.D.
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