Document ID: chunk:federal_register_of_legislation:F2021C01254:reg:5:p9
Version: federal_register_of_legislation:F2021C01254
Segment Type: reg
Provision Reference: reg 5 (pt 9/11)
Character Range: 28493–31437

representations from management and, where appropriate, those charged with governance, in an audit of a financial report.  Appendix 2 of that Standard provides an illustrative example of a representation letter.

Aus A8.13 As management is the primary source of information regarding litigation and claims, the auditor is required to request management to provide written representations about such matters.  Written representations from management provide audit evidence regarding litigation and claims that may have a material effect on the financial report.

Related Procedures (Ref: Para. Aus 7.1-Aus 7.2)

A9.             In accordance with ASA 700,[†] the auditor is required to date the auditor's report no earlier than the date on which the auditor has obtained sufficient appropriate audit evidence on which to base the auditor's opinion on the financial report.  Audit evidence about the status of litigation and claims up to the date of the auditor's report may be obtained by enquiry of management, including in‑house legal counsel, responsible for dealing with the relevant matters.  In some instances, the auditor may need to obtain updated information from the entity's external legal counsel.

Aus A9.1 When new litigation or claims, which may have a material effect on the financial report, have been referred to the entity's legal counsel subsequent to sending the letter of enquiry to the entity's legal counsel and prior to signing the auditor's report, the auditor would ordinarily request management to prepare an additional letter of enquiry to the legal counsel regarding the new litigation or claims.

Aus A9.2 When litigation and claims matters, which may have a material effect on the financial report, are discovered, which were not previously identified by management, the auditor would ordinarily inform management and request management to address further enquiries to, or arrange a meeting with, the entity's legal counsel or other relevant experts, at which the auditor would be present.  In addition, the auditor needs to extend the auditor's audit procedures to ensure that sufficient appropriate audit evidence on which to form an opinion has been obtained.  If, however, having regard to all the circumstances, the auditor is unable to obtain satisfaction that all the information required for the purposes of the audit has been received, the auditor considers the effect on the auditor's report.

Aus A9.3 If information comes to the auditor's attention that may indicate the existence of material liabilities resulting from litigation and claims on which management has not sought advice, the auditor ordinarily discusses the matter with those charged with governance.  Depending on the circumstances, refusal by management to seek advice may be considered to be a limitation in the scope of the auditor's work.

 [Aus] Appendix 1

 (Ref: Para. 5 and A7)
This example letter relates to specific enquiry