Shubham MangalShubham asked 2 years ago

Last para of answer not clear

1 Answers
RaviRavi Staff answered 2 years ago

So its a short note on inquiry
Although corroboration of evidence obtained through inquiry is often of particular importance, in the case of inquiries about management intent, the information available to support management’s intent may be limited. In these cases, understanding management’s past history of carrying out its stated intentions, management’s stated reasons for choosing a
particular course of action, and management’s ability to pursue a specific course of action may provide relevant information to corroborate the evidence obtained through inquiry. In respect of some matters, the auditor may consider it necessary to obtain written representations from management and, where appropriate, those charged with governance to confirm responses to oral inquiries.

When auditor does inquiry we gets response from management, these responses are audit evidences but source is internal hence we should generally corroborated (confirm) by other evidence, suppose management says they their goods are getting sold out and there is no risk of obsolescence  , we should check closing inventory balance with their ageing to confirm / corroborate answer of inquiry.
but then they say it is difficult to corroborate some items like management’s intent, for example they may say our intention is to sell investments after one year, now how to confirm / corroborate this …. in such case we can confirm it by following 4 ways
1. Past History of Management to Follow what they Say regarding investments
2. Reason for particular accounting policy (they may explain fund requirement after one year)
3. Ability to carry intention (they may prove, no need of this money for any other purpose for next one year)
4. Take written representation from CFO
so above are ways to co-corroborate intentions specified by management 

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