A4/M9 - Written Representation

Question 1

what is the purpose of written representation letter from management (but prepare by auditor) to auditor?

Answer 1

basically a piece of letter/evidence to protect the auditor when it comes to legal matters

1. to confirm representation explicitly or implicitly given to the auditor
2. to indicate and document the continuing appropriateness of such representations
3. to reduce the possibility of misunderstanding concerning matters that are the subject of the representations

Question 2

what are the requirements?

Answer 2

1. It’s a final piece of evidential matter
2. letter is mandatory
3. dated same date of audit report
4. signed by CEO and CFO
5. representation: management provide FS info, completeness, disclosure, and subsequent events
6. Materiality: limit to items not directly related to FS
7. when in doubt about the reliability of the written representation: auditor may disclaim opinion or withdraw engagement

Question 3

what are the main contents?

Answer 3

All of the contents below are management responsibility’s to provide and disclose to auditors

1. FS: management is responsible for fairly stated FS; design, implement, and maintain internal control
2. Completeness of information
3. Fraud: management is responsible for design, implement, and maintain IC to prevent and detect fraud
4. laws and regulations: any noncompliance has been disclosed to auditor
5. uncorrected misstatement:
6. litigation and claims
7. estimates: reasonable
8. related party transactions: disclosed
9. subsequent events: adjusted and/or disclosed
10. additional representations