HKSA 580 Issued July 2009; revised July 2010, June 2014, August 2015, January 2016, August 2016, June 2017 Effective fr audits f financial statements fr perids beginning n r after 15 December 2009 Hng Kng Standard n Auditing 580 Written Representatins
COPYRIGHT Cpyright 2017 Hng Kng Institute f Certified Public Accuntants The Hng Kng Standard n Auditing 580, Written Representatins is based n the Internatinal Standard n Auditing (ISA) 580, Written Representatins f the Internatinal Auditing and Assurance Standards Bard (IAASB), published by the Internatinal Federatin f Accuntants (IFAC) in April 2009 and is used with permissin f IFAC. Internatinal Standard n Auditing (ISA) 580, Written Representatins April 2009 by the Internatinal Federatin f Accuntants. This Hng Kng Standard n Auditing cntains IFAC cpyright material. Reprductin within Hng Kng in unaltered frm (retaining this ntice) is permitted fr persnal and nn-cmmercial use subject t the inclusin f an acknwledgment f the surce. Requests and inquiries cncerning reprductin and rights fr cmmercial purpses within Hng Kng shuld be addressed t the Directr, Finance and Operatins, Hng Kng Institute f Certified Public Accuntants, 37/F., Wu Chung Huse, 213 Queen's Rad East, Wanchai, Hng Kng. All rights in this material utside f Hng Kng are reserved by IFAC. Reprductin f Hng Kng Standards n Auditing utside f Hng Kng in unaltered frm (retaining this ntice) is permitted fr persnal and nn-cmmercial use nly. Further infrmatin and requests fr authrisatin t reprduce fr cmmercial purpses utside Hng Kng shuld be addressed t the IFAC at permissins@ifac.rg. Cpyright 2 HKSA 580 (June 2017)
HONG KONG STANDARD ON AUDITING 580 WRITTEN REPRESENTATIONS (Effective fr audits f financial statements fr perids beginning n r after 15 December 2009) CONTENTS Intrductin Paragraph Scpe f this HKSA... 1-2 Written Representatins as Audit Evidence... 3-4 Effective Date... 5 Objectives... 6 Definitins... 7-8 Requirements Management frm whm Written Representatins Requested... 9 Written Representatins abut Management's Respnsibilities... 10-12 Other Written Representatins... 13 Date f and Perid(s) Cvered by Written Representatins... 14 Frm f Written Representatins... 15 Dubt as t the Reliability f Written Representatins and Requested Written Representatins Nt Prvided... 16-20 Cnfrmity and Cmpliance with Internatinal Standards n Auditing... 21-22 Applicatin and Other Explanatry Material Written Representatins as Audit Evidence... Management frm whm Written Representatins Requested... Written Representatins abut Management's Respnsibilities... Other Written Representatins... Cmmunicating a Threshld Amunt... Date f and Perid(s) Cvered by Written Representatins... Frm f Written Representatins... Cmmunicatin with Thse Charged with Gvernance... Dubt as t the Reliability f Written Representatins and Requested Written Representatins Nt Prvided... Appendix 1: List f HKSAs Cntaining Requirements fr Written Representatins Appendix 2: Illustrative Representatin Letter A1 A2-A6 A7-A9 A10-A13 A14 A15-A18 A19-A21 A22 A23-A27 Hng Kng Standard n Auditing (HKSA) 580, Written Representatins, shuld be read in cnjunctin with HKSA 200, Overall Objectives f the Independent Auditr and the Cnduct f an Audit in Accrdance with Hng Kng Standards n Auditing. Cpyright 3 HKSA 580 (June 2017)
Intrductin Scpe f this HKSA 1. This Hng Kng Standard n Auditing (HKSA) deals with the auditr's respnsibility t btain written representatins frm management and, where apprpriate, thse charged with gvernance in an audit f financial statements. 2. Appendix 1 lists ther HKSAs cntaining subject-matter specific requirements fr written representatins. The specific requirements fr written representatins f ther HKSAs d nt limit the applicatin f this HKSA. Written Representatins as Audit Evidence 3. Audit evidence is the infrmatin used by the auditr in arriving at the cnclusins n which the auditr's pinin is based. 1 Written representatins are necessary infrmatin that the auditr requires in cnnectin with the audit f the entity's financial statements. Accrdingly, similar t respnses t inquiries, written representatins are audit evidence. (Ref: Para. A1) 4. Althugh written representatins prvide necessary audit evidence, they d nt prvide sufficient apprpriate audit evidence n their wn abut any f the matters with which they deal. Furthermre, the fact that management has prvided reliable written representatins des nt affect the nature r extent f ther audit evidence that the auditr btains abut the fulfillment f management's respnsibilities, r abut specific assertins. Effective Date 5. This HKSA is effective fr audits f financial statements fr perids beginning n r after 15 December 2009. Objectives 6. The bjectives f the auditr are: (a) (b) (c) T btain written representatins frm management and, where apprpriate, thse charged with gvernance that they believe that they have fulfilled their respnsibility fr the preparatin f the financial statements and fr the cmpleteness f the infrmatin prvided t the auditr; T supprt ther audit evidence relevant t the financial statements r specific assertins in the financial statements by means f written representatins if determined necessary by the auditr r required by ther HKSAs; and T respnd apprpriately t written representatins prvided by management and, where apprpriate, thse charged with gvernance, r if management r, where apprpriate, thse charged with gvernance d nt prvide the written representatins requested by the auditr. 1 HKSA 500, Audit Evidence, paragraph 5(c) Cpyright 4 HKSA 580 (June 2017)
Definitins 7. Fr purpses f the HKSAs, the fllwing term has the meaning attributed belw: Written representatin A written statement by management prvided t the auditr t cnfirm certain matters r t supprt ther audit evidence. Written representatins in this cntext d nt include financial statements, the assertins therein, r supprting bks and recrds. 8. Fr purpses f this HKSA, references t "management" shuld be read as "management and, where apprpriate, thse charged with gvernance." Furthermre, in the case f a fair presentatin framewrk, management is respnsible fr the preparatin and fair presentatin f the financial statements in accrdance with the applicable financial reprting framewrk; r the preparatin f financial statements that give a true and fair view in accrdance with the applicable financial reprting framewrk. Requirements Management frm whm Written Representatins Requested 9. The auditr shall request written representatins frm management with apprpriate respnsibilities fr the financial statements and knwledge f the matters cncerned. (Ref: Para. A2-A6) Written Representatins abut Management's Respnsibilities Preparatin f the Financial Statements 10. The auditr shall request management 1a t prvide a written representatin that it has fulfilled its respnsibility fr the preparatin f the financial statements in accrdance with the applicable financial reprting framewrk, including, where relevant, their fair presentatin, as set ut in the terms f the audit engagement. 2 (Ref: Para. A7-A9, A14, A22) Infrmatin Prvided and Cmpleteness f Transactins 11. The auditr shall request management t prvide a written representatin that: (a) (b) It has prvided the auditr with all relevant infrmatin and access as agreed in the terms f the audit engagement; 3 and All transactins have been recrded and are reflected in the financial statements. (Ref: Para. A7-A9, A14, A22) Descriptin f Management's Respnsibilities in the Written Representatins 12. Management's respnsibilities shall be described in the written representatins required by paragraphs 10 and 11 in the manner in which these respnsibilities are described in the terms f the audit engagement. 1a 2 3 Under the Cmpanies Ordinance, the directrs are respnsible fr the preparatin f financial statements shwing a true and fair view. HKSA 210, Agreeing the Terms f Audit Engagements, paragraph 6(b)(i) HKSA 210, paragraph 6(b)(iii) Cpyright 5 HKSA 580 (June 2017)
Other Written Representatins 13. Other HKSAs require the auditr t request written representatins. If, in additin t such required representatins, the auditr determines that it is necessary t btain ne r mre written representatins t supprt ther audit evidence relevant t the financial statements r ne r mre specific assertins in the financial statements, the auditr shall request such ther written representatins. (Ref: Para. A10-A13, A14, A22) Date f and Perid(s) Cvered by Written Representatins 14. The date f the written representatins shall be as near as practicable t, but nt after, the date f the auditr's reprt n the financial statements. The written representatins shall be fr all financial statements and perid(s) referred t in the auditr's reprt. (Ref: Para. A15- A18) Frm f Written Representatins 15. The written representatins shall be in the frm f a representatin letter addressed t the auditr. If law r regulatin requires management t make written public statements abut its respnsibilities, and the auditr determines that such statements prvide sme r all f the representatins required by paragraphs 10 r 11, the relevant matters cvered by such statements need nt be included in the representatin letter. (Ref: Para. A19-A21) Dubt as t the Reliability f Written Representatins and Requested Written Representatins Nt Prvided Dubt as t the Reliability f Written Representatins 16. If the auditr has cncerns abut the cmpetence, integrity, ethical values r diligence f management, r abut its cmmitment t r enfrcement f these, the auditr shall determine the effect that such cncerns may have n the reliability f representatins (ral r written) and audit evidence in general. (Ref: Para. A24-A25) 17. In particular, if written representatins are incnsistent with ther audit evidence, the auditr shall perfrm audit prcedures t attempt t reslve the matter. If the matter remains unreslved, the auditr shall recnsider the assessment f the cmpetence, integrity, ethical values r diligence f management, r f its cmmitment t r enfrcement f these, and shall determine the effect that this may have n the reliability f representatins (ral r written) and audit evidence in general. (Ref: Para. A23) 18. If the auditr cncludes that the written representatins are nt reliable, the auditr shall take apprpriate actins, including determining the pssible effect n the pinin in the auditr's reprt in accrdance with HKSA 705 (Revised), 4 having regard t the requirement in paragraph 20 f this HKSA. Requested Written Representatins Nt Prvided 19. If management des nt prvide ne r mre f the requested written representatins, the auditr shall: (a) (b) Discuss the matter with management; Reevaluate the integrity f management and evaluate the effect that this may have n the reliability f representatins (ral r written) and audit evidence in general; and 4 HKSA 705 (Revised), Mdificatins t the Opinin in the Independent Auditr s Reprt Cpyright 6 HKSA 580 (June 2017)
(c) Take apprpriate actins, including determining the pssible effect n the pinin in the auditr's reprt in accrdance with HKSA 705 (Revised), having regard t the requirement in paragraph 20 f this HKSA. Written Representatins abut Management's Respnsibilities 20. The auditr shall disclaim an pinin n the financial statements in accrdance with HKSA 705 (Revised) if: (a) The auditr cncludes that there is sufficient dubt abut the integrity f management such that the written representatins required by paragraphs 10 and 11 are nt reliable; r (b) Management des nt prvide the written representatins required by paragraphs 10 and 11. (Ref: Para. A26-A27) Cnfrmity and Cmpliance with Internatinal Standards n Auditing 21. As f July 2009 (date f issue), this HKSA cnfrms with Internatinal Standard n Auditing (ISA) 580, Written Representatins. Cmpliance with the requirements f this HKSA ensures cmpliance with ISA 580. 22. Additinal lcal explanatin is prvided in ftnte 1a and additinal lcal guidance is prvided in ftnte 2a and 3a f Appendix 2. Applicatin and Other Explanatry Material Written Representatins as Audit Evidence (Ref: Para. 3) *** A1. Written representatins are an imprtant surce f audit evidence. If management mdifies r des nt prvide the requested written representatins, it may alert the auditr t the pssibility that ne r mre significant issues may exist. Further, a request fr written, rather than ral, representatins in many cases may prmpt management t cnsider such matters mre rigrusly, thereby enhancing the quality f the representatins. Management frm whm Written Representatins Requested (Ref: Para. 9) A2. Written representatins are requested frm thse respnsible fr the preparatin f the financial statements. Thse individuals may vary depending n the gvernance structure f the entity, and relevant law r regulatin; hwever, management (rather than thse charged with gvernance) is ften the respnsible party. Written representatins may therefre be requested frm the entity's chief executive fficer and chief financial fficer, r ther equivalent persns in entities that d nt use such titles. In sme circumstances, hwever, ther parties, such as thse charged with gvernance, are als respnsible fr the preparatin f the financial statements. A3. Due t its respnsibility fr the preparatin f the financial statements, and its respnsibilities fr the cnduct f the entity's business, management wuld be expected t have sufficient knwledge f the prcess fllwed by the entity in preparing the financial statements and the assertins therein n which t base the written representatins. A4. In sme cases, hwever, management may decide t make inquiries f thers wh participate in preparing and presenting the financial statements and assertins therein, including individuals wh have specialized knwledge relating t the matters abut which written representatins are requested. Such individuals may include: Cpyright 7 HKSA 580 (June 2017)
An actuary respnsible fr actuarially determined accunting measurements. Staff engineers wh may have respnsibility fr and specialized knwledge abut envirnmental liability measurements. Internal cunsel wh may prvide infrmatin essential t prvisins fr legal claims. A5. In sme cases, management may include in the written representatins qualifying language t the effect that representatins are made t the best f its knwledge and belief. It is reasnable fr the auditr t accept such wrding if the auditr is satisfied that the representatins are being made by thse with apprpriate respnsibilities and knwledge f the matters included in the representatins. A6. T reinfrce the need fr management t make infrmed representatins, the auditr may request that management include in the written representatins cnfirmatin that it has made such inquiries as it cnsidered apprpriate t place it in the psitin t be able t make the requested written representatins. It is nt expected that such inquiries wuld usually require a frmal internal prcess beynd thse already established by the entity. Written Representatins abut Management's Respnsibilities (Ref: Para. 10-11) A7. Audit evidence btained during the audit that management has fulfilled the respnsibilities referred t in paragraphs 10 and 11 is nt sufficient withut btaining cnfirmatin frm management that it believes that it has fulfilled thse respnsibilities. This is because the auditr is nt able t judge slely n ther audit evidence whether management has prepared and presented the financial statements and prvided infrmatin t the auditr n the basis f the agreed acknwledgement and understanding f its respnsibilities. Fr example, the auditr culd nt cnclude that management has prvided the auditr with all relevant infrmatin agreed in the terms f the audit engagement withut asking it whether, and receiving cnfirmatin that, such infrmatin has been prvided. A8. The written representatins required by paragraphs 10 and 11 draw n the agreed acknwledgement and understanding f management f its respnsibilities in the terms f the audit engagement by requesting cnfirmatin that it has fulfilled them. The auditr may als ask management t recnfirm its acknwledgement and understanding f thse respnsibilities in written representatins. This is cmmn in certain jurisdictins, but in any event may be particularly apprpriate when: Thse wh signed the terms f the audit engagement n behalf f the entity n lnger have the relevant respnsibilities; The terms f the audit engagement were prepared in a previus year; There is any indicatin that management misunderstands thse respnsibilities; r Changes in circumstances make it apprpriate t d s. Cnsistent with the requirement f HKSA 210, 5 such recnfirmatin f management's acknwledgement and understanding f its respnsibilities is nt made subject t the best f management's knwledge and belief (as discussed in paragraph A5 f this HKSA). 5 HKSA 210, paragraph 6(b) Cpyright 8 HKSA 580 (June 2017)
Cnsideratins Specific t Public Sectr Entities A9. The mandates fr audits f the financial statements f public sectr entities may be brader than thse f ther entities. As a result, the premise, relating t management's respnsibilities, n which an audit f the financial statements f a public sectr entity is cnducted may give rise t additinal written representatins. These may include written representatins cnfirming that transactins and events have been carried ut in accrdance with law, regulatin r ther authrity. Other Written Representatins (Ref: Para. 13) Additinal Written Representatins abut the Financial Statements A10. In additin t the written representatin required by paragraph 10, the auditr may cnsider it necessary t request ther written representatins abut the financial statements. Such written representatins may supplement, but d nt frm part f, the written representatin required by paragraph 10. They may include representatins abut the fllwing: Whether the selectin and applicatin f accunting plicies are apprpriate; and Whether matters such as the fllwing, where relevant under the applicable financial reprting framewrk, have been recgnized, measured, presented r disclsed in accrdance with that framewrk: Plans r intentins that may affect the carrying value r classificatin f assets and liabilities; Liabilities, bth actual and cntingent; Title t, r cntrl ver, assets, the liens r encumbrances n assets, and assets pledged as cllateral; and Aspects f laws, regulatins and cntractual agreements that may affect the financial statements, including nn-cmpliance. Additinal Written Representatins abut Infrmatin Prvided t the Auditr A11. In additin t the written representatin required by paragraph 11, the auditr may cnsider it necessary t request management t prvide a written representatin that it has cmmunicated t the auditr all deficiencies in internal cntrl f which management is aware. Written Representatins abut Specific Assertins A12. When btaining evidence abut, r evaluating, judgments and intentins, the auditr may cnsider ne r mre f the fllwing: The entity's past histry in carrying ut its stated intentins. The entity's reasns fr chsing a particular curse f actin. The entity's ability t pursue a specific curse f actin. The existence r lack f any ther infrmatin that might have been btained during the curse f the audit that may be incnsistent with management's judgment r intent. Cpyright 9 HKSA 580 (June 2017)
A13. In additin, the auditr may cnsider it necessary t request management t prvide written representatins abut specific assertins in the financial statements; in particular, t supprt an understanding that the auditr has btained frm ther audit evidence f management's judgment r intent in relatin t, r the cmpleteness f, a specific assertin. Fr example, if the intent f management is imprtant t the valuatin basis fr investments, it may nt be pssible t btain sufficient apprpriate audit evidence withut a written representatin frm management abut its intentins. Althugh such written representatins prvide necessary audit evidence, they d nt prvide sufficient apprpriate audit evidence n their wn fr that assertin. Cmmunicating a Threshld Amunt (Ref: Para. 10-11, 13) A14. HKSA 450 requires the auditr t accumulate misstatements identified during the audit, ther than thse that are clearly trivial. 6 The auditr may determine a threshld abve which misstatements cannt be regarded as clearly trivial. In the same way, the auditr may cnsider cmmunicating t management a threshld fr purpses f the requested written representatins. Date f and Perid(s) Cvered by Written Representatins (Ref: Para. 14) A15. Because written representatins are necessary audit evidence, the auditr's pinin cannt be expressed, and the auditr's reprt cannt be dated, befre the date f the written representatins. Furthermre, because the auditr is cncerned with events ccurring up t the date f the auditr's reprt that may require adjustment t r disclsure in the financial statements, the written representatins are dated as near as practicable t, but nt after, the date f the auditr's reprt n the financial statements. A16. In sme circumstances, it may be apprpriate fr the auditr t btain a written representatin abut a specific assertin in the financial statements during the curse f the audit. Where this is the case, it may be necessary t request an updated written representatin. A17. The written representatins are fr all perids referred t in the auditr's reprt because management needs t reaffirm that the written representatins it previusly made with respect t the prir perids remain apprpriate. The auditr and management may agree t a frm f written representatin that updates written representatins relating t the prir perids by addressing whether there are any changes t such written representatins and, if s, what they are. A18. Situatins may arise where current management were nt present during all perids referred t in the auditr's reprt. Such persns may assert that they are nt in a psitin t prvide sme r all f the written representatins because they were nt in place during the perid. This fact, hwever, des nt diminish such persns' respnsibilities fr the financial statements as a whle. Accrdingly, the requirement fr the auditr t request frm them written representatins that cver the whle f the relevant perid(s) still applies. Frm f Written Representatins (Ref: Para. 15) A19. Written representatins are required t be included in a representatin letter addressed t the auditr. In sme jurisdictins, hwever, management may be required by law r regulatin t make a written public statement abut its respnsibilities. Althugh such statement is a representatin t the users f the financial statements, r t relevant authrities, the auditr may determine that it is an apprpriate frm f written representatin in respect f sme r all f the representatins required by paragraph 10 r 11. Cnsequently, the relevant matters cvered by such statement need nt be included in the representatin letter. Factrs that may affect the auditr's determinatin include: 6 HKSA 450, Evaluatin f Misstatements Identified during the Audit, paragraph 5 Cpyright 10 HKSA 580 (June 2017)
Whether the statement includes cnfirmatin f the fulfillment f the respnsibilities referred t in paragraphs 10 and 11. Whether the statement has been given r apprved by thse frm whm the auditr requests the relevant written representatins. Whether a cpy f the statement is prvided t the auditr as near as practicable t, but nt after, the date f the auditr's reprt n the financial statements (see paragraph 14). A20. A frmal statement f cmpliance with law r regulatin, r f apprval f the financial statements, wuld nt cntain sufficient infrmatin fr the auditr t be satisfied that all necessary representatins have been cnsciusly made. The expressin f management's respnsibilities in law r regulatin is als nt a substitute fr the requested written representatins. A21. Appendix 2 prvides an illustrative example f a representatin letter. Cmmunicatin with Thse Charged with Gvernance (Ref: Para. 10-11, 13) A22. HKSA 260 (Revised) requires the auditr t cmmunicate with thse charged with gvernance the written representatins which the auditr has requested frm management. 7 Dubt as t the Reliability f Written Representatins and Requested Written Representatins Nt Prvided Dubt as t the Reliability f Written Representatins (Ref: Para. 16-17) A23. In the case f identified incnsistencies between ne r mre written representatins and audit evidence btained frm anther surce, the auditr may cnsider whether the risk assessment remains apprpriate and, if nt, revise the risk assessment and determine the nature, timing and extent f further audit prcedures t respnd t the assessed risks. A24. Cncerns abut the cmpetence, integrity, ethical values r diligence f management, r abut its cmmitment t r enfrcement f these, may cause the auditr t cnclude that the risk f management misrepresentatin in the financial statements is such that an audit cannt be cnducted. In such a case, the auditr may cnsider withdrawing frm the engagement, where withdrawal is pssible under applicable law r regulatin, unless thse charged with gvernance put in place apprpriate crrective measures. Such measures, hwever, may nt be sufficient t enable the auditr t issue an unmdified audit pinin. A25. HKSA 230 requires the auditr t dcument significant matters arising during the audit, the cnclusins reached theren, and significant prfessinal judgments made in reaching thse cnclusins. 8 The auditr may have identified significant issues relating t the cmpetence, integrity, ethical values r diligence f management, r abut its cmmitment t r enfrcement f these, but cncluded that the written representatins are nevertheless reliable. In such a case, this significant matter is dcumented in accrdance with HKSA 230. Written Representatins abut Management's Respnsibilities (Ref: Para. 20) A26. As explained in paragraph A7, the auditr is nt able t judge slely n ther audit evidence whether management has fulfilled the respnsibilities referred t in paragraphs 10 and 11. Therefre, if, as described in paragraph 20(a), the auditr cncludes that the written representatins abut these matters are unreliable, r if management des nt prvide thse written representatins, the auditr is unable t btain sufficient apprpriate audit evidence. 7 8 HKSA 260 (Revised), Cmmunicatin with Thse Charged with Gvernance, paragraph 16(c)(ii) HKSA 230, Audit Dcumentatin, paragraphs 8(c) and 10 Cpyright 11 HKSA 580 (June 2017)
The pssible effects n the financial statements f such inability are nt cnfined t specific elements, accunts r items f the financial statements and are hence pervasive. HKSA 705 (Revised) requires the auditr t disclaim an pinin n the financial statements in such circumstances. 9 A27. A written representatin that has been mdified frm that requested by the auditr des nt necessarily mean that management did nt prvide the written representatin. Hwever, the underlying reasn fr such mdificatin may affect the pinin in the auditr's reprt. Fr example: The written representatin abut management's fulfillment f its respnsibility fr the preparatin f the financial statements may state that management believes that, except fr material nn-cmpliance with a particular requirement f the applicable financial reprting framewrk, the financial statements are prepared in accrdance with that framewrk. The requirement in paragraph 20 des nt apply because the auditr cncluded that management has prvided reliable written representatins. Hwever, the auditr is required t cnsider the effect f the nn-cmpliance n the pinin in the auditr's reprt in accrdance with HKSA 705 (Revised). The written representatin abut the respnsibility f management t prvide the auditr with all relevant infrmatin agreed in the terms f the audit engagement may state that management believes that, except fr infrmatin destryed in a fire, it has prvided the auditr with such infrmatin. The requirement in paragraph 20 des nt apply because the auditr cncluded that management has prvided reliable written representatins. Hwever, the auditr is required t cnsider the effects f the pervasiveness f the infrmatin destryed in the fire n the financial statements and the effect theref n the pinin in the auditr's reprt in accrdance with HKSA 705 (Revised). 9 HKSA 705 (Revised), paragraph 9 Cpyright 12 HKSA 580 (June 2017)
Appendix 1 (Ref: Para. 2) List f HKSAs Cntaining Requirements fr Written Representatins This appendix identifies paragraphs in ther HKSAs that require subject-matter specific written representatins. The list is nt a substitute fr cnsidering the requirements and related applicatin and ther explanatry material in HKSAs. HKSA 240, The Auditr's Respnsibilities Relating t Fraud in an Audit f Financial Statements paragraph 39 HKSA 250, Cnsideratin f Laws and Regulatins in an Audit f Financial Statements paragraph 16 HKSA 450, Evaluatin f Misstatements Identified during the Audit paragraph 14 HKSA 501, Audit Evidence Specific Cnsideratins fr Selected Items paragraph 12 HKSA 540, Auditing Accunting Estimates, Including Fair Value Accunting Estimates, and Related Disclsures paragraph 22 HKSA 550, Related Parties paragraph 26 HKSA 560, Subsequent Events paragraph 9 HKSA 570 (Revised), Ging Cncern paragraph 16(e) HKSA 710, Cmparative Infrmatin Crrespnding Figures and Cmparative Financial Statements paragraph 9 HKSA 720 (Revised), The Auditr's Respnsibilities Relating t Other Infrmatin paragraph 13(c) Cpyright 13 HKSA 580 (June 2017)
Appendix 2 (Ref: Para. A21) Illustrative Representatin Letter The fllwing illustrative letter includes written representatins that are required by this and ther HKSAs. It is assumed in this illustratin that the applicable financial reprting framewrk is Hng Kng Financial Reprting Standards; the requirement f HKSA 570 (Revised) 1 t btain a written representatin is nt relevant; and that there are n exceptins t the requested written representatins. If there were exceptins, the representatins wuld need t be mdified t reflect the exceptins. (Entity Letterhead) (T Auditr) (Date) This representatin letter is prvided in cnnectin with yur audit f the financial statements f ABC Cmpany fr the year ended 31 December 20XX 2 fr the purpse f expressing an pinin as t whether the financial statements are presented fairly, in all material respects, (r give a true and fair view) in accrdance with Hng Kng Financial Reprting Standards. We cnfirm that (, t the best f ur knwledge and belief, having made such inquiries as we cnsidered necessary fr the purpse f apprpriately infrming urselves): 2a Financial Statements We have fulfilled ur respnsibilities, as set ut in the terms f the audit engagement dated [insert date], fr the preparatin f the financial statements in accrdance with Hng Kng Financial Reprting Standards; in particular the financial statements are fairly presented (r give a true and fair view) in accrdance therewith. 1 2 2a HKSA 570 (Revised), Ging Cncern Where the auditr reprts n mre than ne perid, the auditr adjusts the date s that the letter pertains t all perids cvered by the auditr s reprt. The fllwing additinal management representatins are applicable t audits f cmpanies incrprated under the Cmpanies Ordinance: We acknwledge that sectin 380 f the Cmpanies Ordinance requires us t prepare financial statements which give a true and fair view f the financial psitin f the cmpany as at the end f the financial year and f the financial perfrmance f the cmpany fr the financial year. We are respnsible fr taking all reasnable steps t ensure the cmpany keeps prper accunting recrds which are sufficient t shw and explain the cmpany's transactins, disclse with reasnable accuracy at any time the cmpany's financial psitin and financial perfrmance and t ensure that the financial statements cmply with the Cmpanies Ordinance. The financial statements cmply with sectin 383 (Ntes t Financial Statements t Cntain Infrmatin n Directrs' Emluments etc) f the Cmpanies Ordinance which must cntain in the ntes t the financial statements, the infrmatin prescribed by the Cmpanies (Disclsure f Infrmatin abut Benefits f Directrs) Regulatin (Cap. 622G). We are respnsible fr the preparatin f the directr's reprt that (a) cmplies with sectins 390 (Cntents f Directrs' Reprt: General) and 543(2) (Disclsure f Management Cntract) and Schedule 5 (Cntents f Directrs' Reprt: Business Review) f the Cmpanies Ordinance; (b) cntains the infrmatin prescribed by the regulatins made under sectin 452(3) (Financial Secretary May Make Other Regulatins) f the Cmpanies Ordinance; and (c) cmplies with ther requirements prescribed by the regulatins made under sectin 452 (3) f the Cmpanies Ordinance. Cpyright 14 HKSA 580 (June 2017)
Significant assumptins used by us in making accunting estimates, including thse measured at fair value, are reasnable. (HKSA 540) Related party relatinships and transactins have been apprpriately accunted fr and disclsed in accrdance with the requirements f Hng Kng Financial Reprting Standards. (HKSA 550) All events subsequent t the date f the financial statements and fr which Hng Kng Financial Reprting Standards require adjustment r disclsure have been adjusted r disclsed. (HKSA 560) The effects f uncrrected misstatements are immaterial, bth individually and in the aggregate, t the financial statements as a whle. A list f the uncrrected misstatements is attached t the representatin letter. (HKSA 450) [Any ther matters that the auditr may cnsider apprpriate (see paragraph A10 f this HKSA).] Infrmatin Prvided We have prvided yu with: 3 Access t all infrmatin f which we are aware that is relevant t the preparatin f the financial statements, such as recrds, dcumentatin and ther matters; Additinal infrmatin that yu have requested frm us fr the purpse f the audit; and Unrestricted access t persns within the entity frm whm yu determined it necessary t btain audit evidence. All transactins have been recrded in the accunting recrds and are reflected in the financial statements. We have disclsed t yu the results f ur assessment f the risk that the financial statements may be materially misstated as a result f fraud. (HKSA 240) We have disclsed t yu all infrmatin in relatin t fraud r suspected fraud that we are aware f and that affects the entity and invlves: Management; Emplyees wh have significant rles in internal cntrl; r Others where the fraud culd have a material effect n the financial statements. (HKSA 240) We have disclsed t yu all infrmatin in relatin t allegatins f fraud, r suspected fraud, affecting the entity's financial statements cmmunicated by emplyees, frmer emplyees, analysts, regulatrs r thers. (HKSA 240) We have disclsed t yu all knwn instances f nn-cmpliance r suspected nn-cmpliance with laws and regulatins whse effects shuld be cnsidered when preparing financial statements. (HKSA 250) 3 If the auditr has included ther matters relating t management's respnsibilities in the audit engagement letter in accrdance with HKSA 210, Agreeing the Terms f Audit Engagements, cnsideratin may be given t including these matters in the written representatins frm management r thse charged with gvernance. Cpyright 15 HKSA 580 (June 2017)
We have disclsed t yu the identity f the entity's related parties and all the related party relatinships and transactins f which we are aware. (HKSA 550) [Any ther matters that the auditr may cnsider necessary (see paragraph A11 f this HKSA).] 3a Management Management 3a If the auditr has included management's respnsibilities fr ther infrmatin in the audit engagement letter in accrdance with HKSA 210, cnsideratin may be given t include these in the written representatins frm management r thse charged with gvernance: Other Infrmatin In additin t the (cnslidated)* financial statements, we are respnsible fr the preparatin f ther infrmatin included in the annual reprt. We have infrmed yu f all the dcuments that we expect t issue that may cmprise ther infrmatin. We cnfirm that the ther infrmatin cmprises [X dcuments - input specific descriptin f the ther infrmatin]] which we prvided t yu prir t r as f [input the date f yur auditr's reprt], [and the [Y dcuments - input specific descriptin f the ther infrmatin nt btained as f auditr's reprt date] which is/are expected t be made available t yu by [input the expected timing f issuance].] We cnfirm that the (cnslidated)* financial statements and any ther infrmatin prvided t yu are cnsistent with ne anther, and the ther infrmatin des nt cntain any material misstatements. Cpyright 16 HKSA 580 (June 2017)