CA Sandeep has identified certain misstatements during course of audit of an entity. Except two misstatements, all were corrected by management. He…

In the given case, all except two misstatements have been corrected by management. The auditor shall request a written representation from management and, where appropriate, those charged with governance whether they believe the effects of uncorrected misstatements are immaterial, individually and in aggregate, to the financial statements as a whole. A summary of such items shall be included in or attached to the written representation. The documentation requirements regarding misstatements identified during the course of audit in accordance with SA 450 are as under: - The amount below which misstatements would be regarded as clearly trivialAll misstatements accumulated during the audit and whether they have been corrected andThe auditor's conclusion as to whether uncorrected misstatements are material, individually or in aggregate, and the basis for that conclusion. OR If the auditor assesses a risk of material misstatement regarding litigation or claims that have been identified, or when audit procedures performed indicate that other material litigation or claims may exist, the auditor shall, in addition to the procedures required by other SAs, seek direct communication with the entity's external legal counsel. The auditor shall do so through a letter of inquiry requesting the entity's external legal counsel to communicate directly with the auditor. A letter of specific inquiry includes: A list of litigation and claims;Where available, management's assessment of the outcome of each of the identified litigation and claims and its estimate of the financial implications, including costs involved; andA request that the entity's external legal counsel confirm the reasonableness of management's assessments and provide the auditor with further information if the list is considered by the entity's external legal counsel to be incomplete or incorrect.