Udit & Co. is the statutory auditor of Fun Journey Ltd., a company engaged in the tours and travel business. The company has an annual turnover…
CA Final · Advanced Auditing, Assurance and Professional Ethics · RTP · May 2025
Udit & Co. is the statutory auditor of Fun Journey Ltd., a company engaged in the tours and travel business. The company has an annual turnover of 1,200 crores and profits of 150 crores. While planning, the auditors discussed the requirement for a written representation letter from management for confirming that: (i) The auditor is provided with all relevant information and access as agreed in the terms of the audit engagement; and (ii) All transactions have been recorded and are reflected in the financial statements As the audit was near to completion, the auditor disagreed with the management on one of the matters including need of written representation contending that verbal confirmations given during the audit should be sufficient. Thus, separate written representation is not required. Udit & Co., however, explained that under SA 580 obtaining a formal written statement from management is mandatory. Fun Journey Ltd. refuses to provide a written representation letter, despite the auditor's several requests. (a) Whether the contention of auditor for seeking written representation letter is justified?
Suggested Answer and Working Notes:
As per SA 580, “Written Representations”, the auditor shall request management to provide a written representation that it has fulfilled its responsibility for the preparation of the financial statements in accordance with the applicable financial reporting framework, including where relevant their fair presentation, as set out in the terms of the audit engagement. Further, the auditor shall request management to provide a written representation that: (i) It has provided the auditor with all relevant information and access as agreed in the terms of the audit engagement (ii) All transactions have been recorded and are reflected in the financial statements. In the given case, Fun Journey Ltd. refuses to provide a written representation letter, despite the auditor's several requests. Thus, in view of above the contention of auditor is correct.
Topics: Standard on Auditing (SA), CARO 2020
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