ASA 540 - Audit of Accounting Estimates - April 2006
Management RepresentationsManagement Representations
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Management Representations
32 The auditor shall endeavour to obtain written representations from management regarding the reasonableness of significant assumptions used by them in making accounting estimates.
33 ASA 580 Management Representations discusses the use of management representations. Depending on the nature, materiality and extent of estimation uncertainty, management representations about accounting estimates recognised or disclosed in the financial report may include representations:
- about the appropriateness of the measurement processes, including related assumptions, used by management in determining accounting estimates in the context of the applicable financial reporting framework, and the consistency in application of the processes;
- that disclosures related to accounting estimates are complete and appropriate under the applicable financial reporting framework; and
- that no subsequent events require adjustment to the accounting estimates and disclosures included in the financial report.
34 In the event management is unable to or refuses to provide a written representation, under ASA 580 the auditor needs to consider the implications of the refusal for the auditor’s report.