| A11. | An audit in accordance with ISAs is conducted on the premise that management has acknowledged and understands that it has the responsibilities set out in paragraph 6(b).11 In certain jurisdictions, such responsibilities may be specified in law or regulation. In others, there may be little or no legal or regulatory definition of such responsibilities. ISAs (UK and Ireland) do not override law or regulation in such matters. However, the concept of an independent audit requires that the auditor's role does not involve taking responsibility for the preparation of the financial statements or for the entity's related internal control, and that the auditor has a reasonable expectation of obtaining the information necessary for the audit in so far as management is able to provide or procure it. Accordingly, the premise is fundamental to the conduct of an independent audit. To avoid misunderstanding, agreement is reached with management that it acknowledges and understands that it has such responsibilities as part of agreeing and recording the terms of the audit engagement in paragraphs 9-12. |
| A12. | The way in which the responsibilities for financial reporting are divided between management and those charged with governance will vary according to the resources and structure of the entity and any relevant law or regulation, and the respective roles of management and those charged with governance within the entity. In most cases, management is responsible for execution while those charged with governance have oversight of management. In some cases, those charged with governance will have, or will assume, responsibility for approving the financial statements or monitoring the entity's internal control related to financial reporting. In larger or public entities, a subgroup of those charged with governance, such as an audit committee, may be charged with certain oversight responsibilities. |
| A13. | ISA (UK and Ireland) 580 requires the auditor to request management to provide written representations that it has fulfilled certain of its responsibilities.12 It may therefore be appropriate to make management aware that receipt of such written representations will be expected, together with written representations required by other ISAs (UK and Ireland) and, where necessary, written representations to support other audit evidence relevant to the financial statements or one or more specific assertions in the financial statements. |
| A14. | Where management will not acknowledge its responsibilities, or agree to provide the written representations, the auditor will be unable to obtain sufficient appropriate audit evidence.13 In such circumstances, it would not be appropriate for the auditor to accept the audit engagement, unless law or regulation requires the auditor to do so. In cases where the auditor is required to accept the audit engagement, the auditor may need to explain to management the importance of these matters, and the implications for the auditor's report. |
| 11 ISA (UK and Ireland) 200, paragraph A2. |
| 12 ISA (UK and Ireland) 580, "Written Representations," paragraphs 10-11. |
| 13 ISA (UK and Ireland) 580, paragraph A26. |
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