ACCA Audit and Assurance (F8) Practice Exam

What action should be taken if written representations are not provided?

1. Proceed with the audit without them

2. Consult with external auditors

3. Discuss the issue with management and review their integrity

4. Notify regulatory authorities immediately

The correct answer is: Discuss the issue with management and review their integrity

When written representations are not provided during an audit, discussing the issue with management and reviewing their integrity is crucial because written representations are important for acknowledging management's responsibility for the financial statements and any related disclosures. These representations serve as a form of confirmation regarding the accuracy and completeness of the information provided to auditors. Engaging in a dialogue with management helps auditors assess the reasons behind the absence of written representations. It provides an opportunity to understand any underlying concerns or issues that may affect the reliability of the financial statements. Furthermore, assessing management's integrity is essential, as it can impact the overall audit assessment and the level of trust the auditor can place in the management's verbal assurances. In contrast, proceeding with the audit without written representations may expose the auditor to significant risks, including the possibility of misstatements going undetected. Consulting with external auditors may not necessarily address the immediate issues and might not be appropriate unless there are specific circumstances that warrant such action. Notifying regulatory authorities immediately may be an extreme step that is not justified without first attempting to resolve the issue directly with management.