ACCA Advanced Audit and Assurance (AAA) Practice Exam

What do written representations involve in an audit context?

1. Detailed financial statements from management

2. Oral confirmations of financial data

3. Written statements by management confirming specific matters

4. Auditor's independent assessments of financial assertions

The correct answer is: Written statements by management confirming specific matters

In an audit context, written representations are crucial as they involve formal, documented statements provided by management to the auditors. These representations are intended to confirm specific matters related to the financial statements, such as the completeness of information, the accuracy of the financial reports, compliance with laws and regulations, and the integrity of financial operations. By obtaining these written statements, auditors gain important assurances that the information provided is reliable and that management stands behind the assertions made in the financial statements. This practice enhances the auditors' understanding and provides a layer of evidence that complements other audit procedures. Written representations also serve as a reminder for management regarding their responsibilities concerning the financial statements. The use of formal documents ensures clarity and reduces ambiguities that could arise from verbal communications. Options involving detailed financial statements, oral confirmations, or independent assessments do not encapsulate the essence of what written representations are designed to achieve within the audit framework. These alternatives lack the focus on management's explicit confirmations of specific matters relevant to the audit, which is at the heart of written representations.