GEM Ltd has appointed GSP & Co., Chartered Accountants as its Statutory Auditors. While conducting its audit, the audit partner requested the…

In the given case, GSP & Co., auditor of GEM Ltd. requested the management to provide written representation that it has fulfilled its responsibility for the preparation of financial statements in accordance with the applicable financial reporting framework. The Manager (Finance) is of the view that since all records and evidence have already been given, a separate written representation is not required. View of Manager (Finance) is not correct because written representations about management responsibilities are necessary due to the following reasons: Audit evidence obtained during the audit that management has fulfilled its responsibilities regarding preparation of financial statements and about information provided and completeness of transactions is not sufficient without obtaining confirmation from management that it believes that it has fulfilled those responsibilities. This is because the auditor is not able to judge solely on other audit evidence whether management has prepared and presented the financial statements and provided information to the auditor on the basis of the agreed acknowledgement and understanding of its responsibilities. For example, the auditor could not conclude that management has provided the auditor with all relevant information agreed in terms of the audit engagement without asking it whether, and receiving confirmation that, such information has been provided. The written representations requiring fulfilment of management responsibilities in relation to above draw on the agreed acknowledgement and understanding of management of its responsibilities in the terms of the audit engagement by requesting confirmation that it has fulfilled them. The auditor may also ask management to reconfirm its acknowledgement and understanding of those responsibilities in written representations. This is particularly appropriate when: - Those who signed the terms of the audit engagement on behalf of the entity no longer have the relevant responsibilities;The terms of the audit engagement were prepared in a previous year;There is any indication that management misunderstands those responsibilities; orChanges in circumstances make it appropriate to do so.