(c) Steps to take if written representation on warranty provision is not provided
ISA 580 Written Representations provides guidance to the auditor in the case where written representations are requested
from management but they refuse to provide.
If management does not provide the requested written representation on the warranty provision the auditor of Greenfields
should discuss the matter with management to understand why they are refusing.
In addition the auditor should re-evaluate the integrity of Greenfields’ management and consider the effect that this may have
on the reliability of other representations (oral or written) and audit evidence in general.
The auditor should then take appropriate actions, including determining the possible effect on the audit opinion.
Impact on audit report
As the auditor is unable to obtain sufficient appropriate evidence to conclude that the warranty provision is free from material
misstatement then a modified audit opinion will be required.
The warranty provision is material but not pervasive and therefore a qualified opinion would be appropriate.
The audit report will require an additional paragraph before the opinion which will describe the reason for the modification;
namely that management refused to provide a written representation in relation to the warranty provision and hence we are
unable to form an opinion on this balance. The opinion paragraph will be amended to state ‘except for’. |
